Tag Archives: affordable housing

Compact, convenient & cost-effective 1BHK in Mumbai

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News Point: The existing demand, few takers of larger apartment and some policy incentives lead to comeback of 1BHK in Mumbai.

1BHK, Small apartment, Studio apartment, Affordable homes, compact home, Demand for smaller homes, Demand for 1BHK, India real estate news, Indian property market news, Investment into smaller homes, Track2Media Research, Track2RealtyManohar Joshi, a Chartered Accountant, was on the look out for 1BHK in Mumbai for quite some time. However, there was hardly any inventory of 1BHK in the city that could be bought with a modest budget of INR 70 lakh. He thought he would never be able to buy a house in the city. The news of return of 1BHK in Mumbai has now come to him as a pleasant surprise.

“In recent past, I spoke to a couple of developers also on this. I have been curious to understand why they are not constructing 1BHK that is mostly in demand in India’s costliest property market. I was told that with the existing regulations it is just not financially viable business for them. I am now happy that the business eco system has changed for the better,” says Joshi.

This Chartered Accountant is not the only one to welcome the return of 1BHK in the city. As a matter of fact, most of the prospective homebuyers in the city are happy that the market is now offering them what they can afford. A 2BHK and bigger units in the city means no less than INR 1.5 crore; something that most of the buyers in India’s financial capital just cannot afford.

Analysts maintain the market is increasingly shifting its focus towards the homebuyers. Luxury and premium housing in Mumbai means spending a fortune and hence the focus has shifted towards building smaller 1BHK affordable homes that cost around INR 50 lakh to 60 lakh.

What has also fuelled this inventory creation is the fact that the Centre recently gave infrastructure status to smaller homes. This will help builders get funds easily and also give them more time of five years from the current three years to complete the projects.

What fuels 1BHK demand? 

1BHK always a challenge for the developers when the land cost is exorbitantly high and density norms are rigid

The Centre recently gave infrastructure status to smaller homes

1BHK of 30 sq mtrs will help builders get funds easily

Builder also gets more time of five years from the current three years to complete the projects

The industry stakeholders also vouch for the 1BHK. They feel it is a sure shot way to ignite the demand in the city. Vipul Shah, Managing Director, Parinee Group admits that the return of 1BHK has a lot of significance in today’s market considering the nuclear families and affordability. Also, for developers, the announcement of tax benefits for flats with area of 30 sq. mtrs. has triggered the announcement of many projects with that criteria.

For achieving the goal of ‘Housing For All’ by 2022, both the state and central governments have been encouraging affordable housing schemes. The realty sector has seen slowdown in luxury apartments since past few years.  The government’s objective can be effectively achieved by more supply of 1 BHK within city areas,” says Shah.

Rahul Nahar, Chairman, Xrbia Developers believes that while some of us may still fantasize about walk-in closets, expansive living rooms and ample storage, oversized houses are becoming less and less desirable. Well-designed compact spaces are becoming increasingly popular amongst the next generation of homeowners who crave flexibility, convenience and affordability in every aspect of their lives, from the music they listen to the homes they live in.

“The issue of cost is, of course, unavoidable. Millennials earn 20% less than Boomers at the same stage of life and typically have a significantly lower net worth. With house prices skyrocketing in rapidly urbanising centres – it would take 580 years for an individual earning an average Indian income to buy a flat in central Mumbai – the reality is that most of us can simply no longer afford a large home. Choosing to live in a compact home is fast becoming the only option available for first-time buyers craving the convenience of living in the centre of Mumbai,” says Nahar. 

It is hence no surprise that some of the developers in the city with iconic luxury projects as their flagship are today on the drawing board to create stock of mass housing with 1BHK. The idea is to beat the slowdown, get tax incentives and also get time of five years to complete the project.

1BHK is a win-win situation for both the builders as well as the buyers. It was not the priority of the developers in the city due to various development rules that deterred the developers. Moreover, 1BHK is always a challenge for the developers when the land cost is also exorbitantly high and density norms are rigid. However, the changed market dynamics has altered the scenario and both the builders as well as the buyers are welcoming the return of 1BHK in the city.  

By: Ravi Sinha

Populist budget & challenges of affordable homes

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Bottom Line: Contrary to the hype of affordable housing around the Union Budget 2017-18, many Indians across the cities are questioning how the budget has addressed the core issue of affordability.

Union Budget, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2Realty“Siddharth Chopra, a Mumbai resident has been glued to the television news channels during the live telecast of the Union Budget 2017-18. Like the rest of the Indians expecting the budget bonanza for the middle class affordable homebuyers, he is now rather confused as most of the analysts are debating how the Union Budget has addressed the pertinent issue of affordable housing.

“It is no doubt a populist budget that may earn goodwill to the government in terms of getting media headlines and garnering votes in the rural areas. But for people like us living in the metro cities, I wonder how the budget has addressed the concerns of affordable housing. The government might have redefined the affordable housing by increasing the size of the carpet area and giving it the infrastructure status, but that will address the concerns of the developers. What about the homebuyers?” questions Siddharth.

Like this confused homebuyers, many Indians across the cities are today asking this questions as to how the budget has addressed the core issue of affordability. Affordability for a common affordable homebuyer is more about the pricing than the size of the apartment. As per the standard definition of affordable housing, any house that costs more than 5 years of gross income of the buyer with the second simultaneous condition that the EMI should not cost more than 50% of the take home salary is not affordable.

Another definition often floated in the Indian context is that any house that costs approximately 20 years of rental value is affordable. The budget, if seen with the right context of affordable housing in the major cities of India, fails to answer these much-needed affordable requirements of the Indians.

Beyond symbolic relief for affordable housing

  • Increasing the size of affordable housing without reducing the price does not address the concerns of affordable housing
  • No relief in Service Tax, VAT is a dampener for affordable housing
  • No incentive for developers to reduce the pricing and make houses affordable
  • Budget fails to redefine affordable housing and low cost housing in terms of price point

The developers are nevertheless happy as the budget has addressed their concerns to a large extent. JC Sharma, MD & VC of Sobha Limited points out that the focus on affordable housing is laudable, as it has been accorded the infrastructure status which will have many ripple effects.

“Government’s proposal to take into consideration the carpet area of 30 and 60 sq. metres instead of built-up area of 30 and 60 sq. metres (as was the case earlier) of the houses is a welcome step, whereby 30 sq. metres limit will apply only in case of municipal limits of 4 metropolitan cities, while for the rest of country, including the peripheral areas of metros, limit of 60 sq. metres will apply. This will allow developers to plan their future projects within the 60 sq. metre carpet area, which will boost the housing sector immensely,” says Sharma.

Ashish Puravankara, Managing Director, Puravankara Limited believes the budget has spelt out roadmaps and allocations across various initiatives of the Central Government and the Finance Minister has done an excellent job of managing the expectations. According to him, revision of Built-up area to Carpet area is a great move to push for apartments in affordable housing category.

“The according of Infrastructure Status to the Affordable Housing will boost investment in this category. Extension of period for carrying forward the MAT Tax from the existing 10 years to now 15 years is a welcome move,” says Puravankara.

Kishore Bhatija, MD – Real Estate Development, K Raheja Corp says the government has been working towards boosting the affordable housing segment and the announcements made today are in line with their objectives. The infrastructure status to affordable housing sector is a quantum step for the development of housing.

“In addition to this, the tax relief for developers on unsold inventory is a positive step resulting in lowering the burden on their shoulders. The changes in income tax slabs are a welcome move which will leave more liquidity in the hands of consumers boosting consumption,” says Bhatija.

However, beyond the euphoria of the budget sentiment within the built environment of the Indian real estate, the fact lies that the budget has not addressed the key concern of affordability of the average homebuyers in the major cities of India. Moreover, there is hardly any substantial focus on job creation which has a direct linkage with the housing consumption in the cities, especially the affordable housing.   

By: Ravi Sinha

Fitch finds India’s real estate outlook negative for H2 ’12

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fitch ratings, india real estate news, real estate news india, india realty news, realty news india, kumari selja, rohtas goel, Kapil Sibal, sonia gandhi, rahul gandhi, manmohan singh, Unitech, DLF, india property news, property news india, naredco, affordable housing, government of india, ndtv.com, ndtv, zeenews, aajtak, times of india, hindustan times, indian real estate forum, indianrealestateforum.com, indianrealtynews.com, cnn-ibn, rajdeep sardesai, sagarika ghose, vinod dua, arnab goswami, barkha dutt, raghav behl, prannoy roy, vikram chandra, ravi sinha, track2media. track2realty, DDA, delhi real estate news, new delhi, K.P. Singh, Rajiv Singh, Sharad Pawar, Jairam Ramesh, CBI, DB Realty, LavasaFitch Ratings says in a new report that the Rating Outlook for the Indian real estate sector continues to be Negative for H212, due to persistent sluggish demand, high construction costs and liquidity pressures.

Given Reserve Bank of India’s caution on interest rate cuts, high equated monthly instalments (EMIs) will continue to be a deterrent for potential home buyers. This, together with high property prices and elevated inflation will keep demand sluggish.

However, y-o-y growth of home loans by banks – which had been slowing for the 12 months to April 2012 – picked up markedly in May and June 2012, and if continued may help spur the sector.

Slowdown in the economy and subdued job growth in the IT sector, which was at its lowest quarterly level in Q212, will hold back demand for commercial and retail properties.

Real estate companies will continue to face margin compression from high construction costs for both building materials and labour. From December 2011 to April 2012 the price of steel increased 13% and that of cement by 12%. Notwithstanding the trend of deleveraging since Q311, slowing demand, high costs and thus declining profits will keep leverage high for most real estate companies.

Reliance of real estate companies on operating cash flow will assume significance in the near term as available funding options remain limited. Growth of bank lending to the commercial real estate sector was low at 1.5% y-o-y in June 2012. Except for some pick-up in private equity, other funding options are restricted. As a result, companies that derive significant revenue from lease rentals will have a more stable credit profile compared with their counterparts whose business model is based on outright sale.

SME has its own brand value to attract realtors

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By: Manu Sharma 

3rd of the series

Track2Realty Exclusive

- india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news,Track2Media, Track2Realty, ravi sinha In commercial real estate there is a general marketing strategy to showcase brands that book the space. Will SMEs cluster give the developer that cutting edge? Realtors believe most Indian mid-sized companies have already emerged as recognizable brands. Companies such as Gati, Angel Broking, Samsonite, Tarz Lifestyle, Donear and other such companies are well-known; hence it is the facilities that the developer offers take precedence. They are looking for the best value for money; hence there is a pressure on keeping the prices competitive and facilities as attractive as possible.

The question is whether focus on SMEs reflects a negative outlook on the commercial real estate where market has got saturated for the developers. Mayur Shah, Chief-Sales and Marketing, Ackruti City outrightly rejects this theory. According to him the focus is now on every segment of the market, which is holistic and allows a developer to offer a choice of options. Market was never saturated. Absorption took a backseat when the economy was hit and expansion plans were put on hold. In fact in some locations commercial realty has done better than the residential markets. People have realized that to keep the economy growing and their own businesses flourishing, they have to expand and the recent reports on absorption is a reflection of this realization.

“Most of the banking and finance companies started small and have grown only in the last six to seven years, which is a revelation in itself. Some well-known IT companies have grown in size only recently. India has more than 5000 mid- sized companies and at least more than half started their businesses in the metro cities. So SMEs being only in tier II and tier III is a myth. The idea is to offer office spaces at the right locations and offer the right mix of floor spaces and amenities,” says Shah.

Real estate bill to provide affordable housing

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affordable housing, EWS housing, economically weaker sections housing projects, Delhi NCR real estate, Bangalore Real Estate, Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, Mumbai Real Estate, India PropertyThe government Friday said it is committed to providing affordable housing to all and that work is underway on a real estate regulation bill.

“The government is committed for providing shelter to all, and for this the participation in public sector is being promoted,” said Sunil Kumar Singh, Joint Secretary Housing, Ministry of Housing and Urban Poverty Alleviation at Realty 2011, 7th international conference on real estate.

Speaking on improving the service levels, Singh said that the government is focused on integrated development of infrastructure services, securing linkages between asset creation and maintenance for long term project sustainability and accelerating the flow of urban sector investments and that the reforms have to be implemented on state and central level.

“We are also working on the Real Estate Regulation Bill which will focus on augmentation of land supply to increase the stock of affordable housing, much transparent system and empowering the consumer,” Singh said.

A report jointly prepared by industry lobby Confederation of Indian Industry (CII) and Grant Thornton pointed out the changes that the Indian cities should bring about to address challenges of sustainable growth, quality of life and climate change.

The report highlights five key aspects that are critical for ensuring brighter future of the Indian real estate sector and Indian cities at large as planning, governance, infrastructure, finance and green technology.

According to Vishesh Chandiok, National Managing Partner, Grant Thornton India, only 35 percent of population of India is urban while that of China is 65 percent. With India becoming a second favourite investment destination after US, there would be immense pressure on urban India.

Therefore 1 trillion dollar investment is required for infrastructure development in India in contrast to 500 billion dollars as allocated in the 11th Five Year Plan.

For better infrastructure development, Pradeep Kumar, Chief Executive Officer, India Infrastructure Finance Company Ltd called in for participation of local bodies.

He sought that merely creation of real estate pockets like in Gurgaon will not help unless the municipal corporation steps forward to support local infrastructure.

Realty at the bottom of the pyramid

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By: Ravi Sinha

affordable housing, EWS housing, economically weaker sections housing projects, Paramount Group, Urban Heights Developers, Vigneshwara Developers, Delhi NCR real estate, Bangalore Real Estate, Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, ndtv.com, ndtv, aajtak, zee news, india news, property news, real estate news, 99acres.com, 99 acres, indianrealtynews.com, indianrealestateforum.com, Mumbai Real Estate, India PropertyWhile everybody, including the Finance Minister seems to be focussing on the affordable housing, the definition of the real estate at the bottom of the pyramid seems to be changing. After all, the focus of the real estate at the bottom of the pyramid should have aimed to the EWS (Economic Weaker Section) housing schemes where various state governments are also promising incentive to the realtors. Still, there are very few takers for this.

Unlike the general perception, fact of the matter is that there is a strong demand in this segment especially in the metros where the immigration is more prominent. The immigration is by virtue of reason of poverty alleviation that the migrant workers come to the metros. Evidently, this migration is taking place from local village to local city. Therefore, the EWS housing demand is across the country from metros to cities.

Largely, this segment has been catered to by the un-organised and unregulated developers. Till recent past, this domain solely was kept with the Govt. itself. In the early 2000s, only Haryana State took the initiative of licensing housing for EWS in Private sector in Haryana, wherein a 25% component was built-in as mandatory licensing condition. Therefore, licensed developers have been catering to this segment more by regulation than by business initiative.

This model is being adopted across the country by other states but not very aggressively for the reason that states want to house their citizens and not migrants under this category and such citizens with purchasing capacity are more in industrially active states.

Amar Kapoor, Director, Urban Heights believes it is a very viable segment in terms of profit making but unviable or rather longer process for brand visibility by just building projects focusing on EWS housing. His wish list is tax holidays and speedy clearance of projects to make this segment more lucrative. “Demand has to be the key driver for making such projects feasible. However if governments frees up large tracts of land which are currently under No Development Zones for EWS, it may be tempting for developers as some of them are in lucrative locations. I also don’t see it as a non-metro phenomenon in India. If you see globally all big cities such as NYC, London etc. they have EWS housing outside the main city where the land is cheaper. But the phenomenon has not yet taken place in India due to lack of infrastructure and connectivity,” he says.

Urban planning experts feel the category of EWS needs to be defined clearly. As housing is a State subject, the policy of housing is designed for the subjects (States’ citizen) of the State and not for regularizing illegal immigration. Sunil Dahiya, Managing Director of Vigneshwara Developers who is venturing into EWS housing says, “As illegal immigration, is perceived as a burden on the social, political and infrastructure fabric of the city. Therefore, the policy needs to recognize the exact status of the EWS category viz; should it be by bonafide residency (States’ citizenship) or economic status. If it is recognized by status of bonafide residency/states citizenship then most of the migrants will be automatically excluded. If it is by status of economic standing, most of the slum dewellers will qualify and create a political imbalance as voter recognition will be mandatory.”

Atul Modak, Head of Kohinoor City says the cost of land in metros is so high that it makes EWS housing unviable for realtors. That is why housing for EWS is comparatively easier in non-metros. However, if the government can provide more FSI for EWS housing, it need not remain a non-metro phenomenon.

“There certainly is a pressing need for providing affordable housing for this segment. The question remains as to who will do it. Ideally, it should be a strong government initiative roping in the private sector, a PPP whereby the government encourages realtors to construct homes for the EWS making it viable for them by giving sops. While the government has the power to attract more and more realtors to encourage them to cater to this section too, the realtors have the capacity to construct houses to meet this demand. If this happens, the property market at the bottom of the pyramid will also pick up. Higher volumes in this segment will undoubtedly make it viable for realtors too,” Modak says.

Ashwani Prakash, Executive Director of Paramount Group sums it us with the learning curve of realtors post slowdown to focus on EWS housing. “One of the reasons the sector could cope up with slowdown was the shift of focus on affordable housing. It was during this period that we realized that there is more robust business at the bottom of the pyramid. Hence, now onwards you will find more EWS launches, not because of mandatory provisions but out of the business strategy,” he says.