Following a slew of policy initiatives and regulatory changes in 2017-18, affordable housing offers 6-8 billion sq. ft. development opportunity in India over the next 3-4 years, showed a CARE Ratings report.
Affordable housing segment of late is being primarily driven by government policies and incentives. As per Government estimates, over 40 million urban homes need to be constructed by 2022 in order to achieve its housing for all targets.
During the last 24 months, the government has introduced schemes for affordable housing like interest subsidy for low and economically weaker sections, affordable housing being conferred infrastructure status to ease fund availability for these projects and additional tax-benefit for both developers and home-buyers.
“The government is expected to fund 15-20% or roughly Rs 1.2 trillion over the next 3-4 years in affordable housing. The remaining is expected to come from private investments and PPP projects,” said the report.
Owing to the series of reforms, residential real estate in India has rapidly become a more formalised, sustainable and robust business opportunity. Realty developers have slowly but steadily started catering to the affordable and low ticket segment, which has been long unserved and underserved owing to low margins. On the demand side, support from Government schemes like Pradhan Mantri Awas Yojana (PMAY) and Credit Linked Subsidy Scheme (CLSS) ensures availability of affordable credit for low-cost housing buyers.
Residential real estate sector has started witnessing some revival as more of affordable housing inventory has started hitting the market during the second half of 2017-18. According to the rating agency, the performances of listed companies- NIFTY Realty constituents in particular, indicate possible improvement in demand and more importantly, sales in real estate sector.
In terms of pricing, the trend across top 11 markets across India as per data from National Housing Bank’s NHB Residex suggests steady assessment prices.
According to data from Economic Survey 2018 released by Government of India, the housing inventory stood at 8.08 lakh units by October 2017, witnessing a 10% decline over the previous reported inventory number.
Fewer launches post demonetization and implementation of RERA led to lower inventory addition while sales overtook the number of units added during the year. The same has been a steady trend in the past 2-3 years where the sales numbers have been higher than the number of units added, the report said.