Getting it right

In the midst of a slow­down, de­vel­op­ers are dis­cov­er­ing that the right price and size can still gen­er­ate the much elu­sive de­mand

Hindustan Times (Chandigarh) - Estates - - ESTATES - Mu­niesh­wer A Sa­gar mu­niesh­wer.sa­gar@hin­dus­tan­times.com

The hous­ing­mar­ket slow­down is for real. It is also a mat­ter of mar­ket fact that low de­mand and price cor­rec­tions de­fine the pre­vail­ing mar­ket con­di­tions in the hous­ing sec­tor. The ex­act quan­tum of the un­sold in­ven­tory with de­vel­op­ers is a sub­ject of spec­u­la­tion but the sever­ity of the prob­lem is not in dis­pute. De­vel­op­ers are strug­gling to un­load their in­ven­tory and gen­er­ate rev­enues. The cri­sis is se­vere in the mid-priced and higher-priced hous­ing seg­ments.

But, in them ids to fall this pes­simism, some de­vel­op­ers are dis­cov­er­ing that the buyer can still be at­tracted if the prop­erty size, price and the con­di­tions are right. In sev­eral lo­ca­tions across the state, buy­ers are mak­ing the de­ci­sion to en­ter the pri­mary and se­condary mar­kets if the prop­erty size is small and price is in the af­ford­able or budget seg­ments. EN­COUR­AG­ING RE­SPONSE FOR SMALL APART­MENTS “Jalandhar, like rest of the ci­ties in the state, is in the midst of a realty slow­down. Price cor­rec­tions and low de­mand are also the norms for the realty sec­tor here. New builders and projects are rare for the city for the last cou­ple of years. But, re­cently, a de­vel­oper planned for rel­a­tively small sized, around 850 sq ft, apart­ment. The buyer re­sponse for the project is very en­cour­ag­ing. In­ter­est­ingly, for the larger apart­ments, the va­cancy rates are high. For in­stance, a de­vel­oper of­fer­ing pent houses of more than 6,000 sq ft is find­ing no tak­ers. The end-user is ac­tive but only in seg­ments where de­vel­op­ers peg prices rel­a­tively low,” says Harpal Singh, 36, a Jalandhar-based real es­tate con­sul­tant.

In a sim­i­lar in­stance, one of Zi­rakpur-based de­vel­op­ers is strug­gling with large un­sold in­ven­tory and bur­geon­ing debt, “Re­cently of­fered budget hous­ing with apart­ment prices start­ing at ₹ 15 lakh. The de­vel­oper was re­ceiv­ing poor re­sponse in his older projects, most of which are in the mid-price seg­ment. But, in the budget hous­ing, he is start­ing to suc­cess­fully at­tract buy­ers,” says Man­deep Arora, 43, a lo­cal real es­tate con­sul­tant.

In the res­i­den­tial seg­ment, the low price and small size units, which are getting the buyer at­ten­tion and re­liev­ing the pres­sure on the be­lea­guered builders, are mainly con­cen­trated in the built-up res­i­den­tial prod­ucts like in­de­pen­dent floors and apart­ments. “Smaller apart­ments, rang­ing be­tween 800 sq ft and 1,000 sq ft are start­ing to get favour with de­vel­op­ers across the state. The new supply gen­er­a­tion in this price sen­si­tive seg­ment is still slow, but, more and more de­vel­op­ers are keen to tap in this seg­ment. It should be re­mem­bered that the mar­ket is full of mid-priced and higher priced prop­er­ties, both in the pri­mary and se­condary mar­kets. De­vel­op­ers for long have fo­cused on the apart­ments big­ger than 1,200 sq ft. There are sev­eral rea­sons behind de­vel­op­ers favour­ing the mid-sized apart­ments. Govt pol­icy is one of these rea­sons, but, the most im­por­tant is de­vel­op­ers fol­low­ing blindly the mar­ket,” says Singh.

BUILDERS TEMPTED TO EX­PLORE SMALL­SIZED SEG­MENT

Now again, the chang­ing trend is

IN SEV­ERAL AR­EAS ACROSS THE STATE, BUY­ERS ARE MAK­ING THE DE­CI­SION TO EN­TER THE PRI­MARY AND SE­CONDARY MAR­KETS IF THE PROP­ERTY SIZE IS SMALL AND PRICE IS IN AF­FORD­ABLE OR BUDGET SEG­MENTS

con­tribut­ing to more and more de­vel­op­ers jump­ing to the small size units. “If some de­vel­op­ers find suc­cess in a price seg­ment, then oth­ers also try to en­ter the same seg­ment. Ear­lier, this seg­ment was the mid-sized seg­ment. Now, with some de­vel­op­ers tast­ing suc­cess in the small-sized seg­ment, other builders are also tempted to ex­plore it,” says Singh. In ad­di­tion to this, with no buy­ers in the big­ger-sized seg­ments, builders have no op­tion but to make in­vest­ments in the smaller apart­ments.

The in­de­pen­dent floor seg­ment de­buted in the last stages of the 2007-2009 prop­erty mar­ket boom pe­riod.

Dur­ing this pe­riod, prices of apart­ments and plots in­creased sharply and most home buy­ers were find­ing it dif­fi­cult to af­ford these prop­er­ties. So, de­vel­op­ers started to of­fer in­de­pen­dent floors, which were rel­a­tively cheaper to af­ford.

IDEN­TITY OF FLOOR SEG­MENT

“Ear­lier, the floors were in­tro­duced as a cheaper al­ter­na­tive to apart­ments and plots. The sizes were sim­i­lar to the apart­ment sizes in terms of cov­ered area and lesser in terms of su­per ar­eas. Builders were also of­fer­ing floors as a built-up al­terna- tive in the plot­ted seg­ment. Now the floor seg­ment has taken an iden­tity of its own,” says Ra­jesh Garg, 54, a Ludhiana-based re­al­tor. Most builders were ear­lier of­fer­ing floors on big­ger sized plots and smallest were gen­er­ally on a 250 sq yard plot. Now, the con­di­tions are chang­ing in the seg­ment.

“In or­der to tap into the budget and af­ford­able hous­ing seg­ments, builders have now started of­fer­ing floors on 100 sq yard plots. In some of the lo­ca­tion, these are priced as low as Rs 10 lakh. Even though most of these lack good con­struc­tion qual­ity and ameni­ties like ade- quate park­ing spa­ces yet these are eas­ier to sell for the builder. In this price seg­ment, the buyer is price sen­si­tive and not very par­tic­u­lar about the qual­ity of ameni­ties or con­struc­tion,” says Garg.

IM­PACT OF GOVT POLI­CIES

The in­creased govern­ment em­pha­sis on budget and af­ford­able hous­ing seg­ments is fa­cil­i­tat­ing this mar­ket driven change in the builder prod­uct choice. “States like Pun­jab have in­tro­duced af­ford­able hous­ing pol­icy, un­der which dif­fer­ent hous­ing norms like floor area ra­tio are re­laxed for the builder en­ter­ing the seg­ment. Also, the cen­tral govern­ment has in­tro­duced dif­fer­ent schemes like sub­sidised home loans for smaller-sized and low-priced home buy­ers. Builders are tai­lor­ing their prod­ucts to tap into this de­mand seg­ment,” says Prit­pal Singh, 59, a Ludhiana-based busi­ness­man and a prospec­tive buyer.

The supply in the budget and af­ford­able seg­ment is ex­pected to in­crease as builders start to move away from the higher mar­gin busi­ness model to higher vol­umes model, say lo­cal realty ex­perts.

More and more de­vel­op­ers are now of­fer­ing af­ford­able hous­ing

De­vel­op­ers are reg­is­ter­ing higher sales in the budget seg­ment

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