Low income housing sector in India

Posted on Dec 12 2013 - 5:25pm by IBC News
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Low income housing sector has always been avoided by the big players in the real estate development business. Reason being the low margins, greater effort and set of skills which are different from what the traditional builders possess. These factors have kept away reputed builders from this sector. Tata Housing has its presence in this sector.

In the recent times there has been a change in the viewing of and shift in approach towards this sector. With the Ministry of Urban Development estimating a 24.7 million unit shortage in low-income housing, the opportunity is huge. Last three years indicate that a start has been made. A research conducted by Monitor Deloitte, has revealed that about 78,000 units have been launched in this period and this progress points to a number of developers taking baby steps in this direction. Amongst these new generation builders Poddar Developers are the frontrunner. They have launched four projects in the outskirts of Mumbai/Pune, and have plans to launch at least six more projects in the next two years. Vastushodh in Pune and DBS in Ahmedabad are other builders in this segment. These developers are taking strides in this line of business and, in time, have the potential to become large national players.

Developers can develop projects that offer affordable accommodation to thousands of families and yet do not look like a low cost venture. Some developers have made affordable projects with rates starting from as low as approximately Rs 1900 per sq ft. But they hardly look low cost. Such projects have parks, cricket pitch and club house and all other amenities that are expected in a premium housing project. These apartments can also have better finish than traditional low-income housing construction. The walls are well plastered, the toilet fittings are from reputed brands and the plumbing is good.

In case of traditional developers and their property, the delay in completion of the project is not a matter of bother as the houses are sold in trenches and prices of units increase with the passage of time. Buyers also, do not bother because their investment continues to appreciate. In low cost projects, delay causes increase in interest and thus cost of construction. Buyers can ill afford delay after commencement of repayment of monthly installment of their loan. Hence, the time factor is of paramount importance.

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