Urban affordable housing segment presents a $11.8 billion (Rs 75,800 crore) opportunity for the private sector, estimates real estate consultant Cushman & Wakefield in a report released in association with realtors body CREDAI.
The consultancy, in a report released at NATCON 2015 held in Istanbul, pegs demand for affordable housing at 535,400 units for homes in the price range of Rs 20-50 lakh in Delhi-NCR, Bengaluru, Chennai, Hyderabad, Kolkata, Pune and and Rs 50-70 lakh in Mumbai (MMR). "This spells immense opportunity for the private sector to explore urban affordable housing in India through various models, which can be profitable for all stakeholders," said Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield.
Urban affordable housing has long been neglected in India due to various reasons such as high land prices, delays in getting approvals and low margins in the segment. "Now with renewed focus from government, we expect this segment to gather momentum going forward," Dutt added.
Real estate developers are also well aware of the opportunity in this segment, with around 7,000 affordable units launched in the top cities in the June quarter, an increase of 320% on a quarter-on-quarter basis. Around 60% of the total units were launched in the National Capital Region (NCR) alone, comprising Delhi, Gurgaon, Noida and Faridabad, during the June quarter.
The overall new launches, however, rose a tepid 14% in the April-June quarter, compared to the previous quarter.
The central government is placing strong emphasis on the 'Housing for All by 2022' initiative lately. Getamber Anand, President, CREDAI National, feels the residential market can offer a multitude of opportunities if innovative housing models that would address challenges of specific target segments are adopted. "The affordable housing segment that is now backed by a strong mandate of the central government currently witnesses a demand-supply mismatch and it is imperative that public-private-partnerships be given an impetus to achieve desired scale," he added.
Private real estate players have shied away from this segment due to low margins. "Incentivizing the sector by making land available, reducing raw material prices, providing additional Floor space index (FSI) for such developments, etc, are bound to give a thrust to development of low cost housing units," said the report.