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
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