GET­TING IT RIGHT

To keep the price tags of their of­fer­ings at­trac­tive, de­vel­op­ers have been re­duc­ing the aver­age car­pet area of apart­ments across ci­ties

HT Estates - - HTESTATES - Anuj Puri HT Es­tates Cor­re­spon­dent

I n I ndia’s highly dy­namic mar­ket en­vi­ron­ment, change and in­no­va­tion have be­come es­sen­tial for the sur­vival of any busi­ness. The hous­ing sec­tor, which was in the pre­vi­ous years de­fined by a re­mark­able lack of change, has been no ex­cep­tion. The winds of change are caus­ing as­pects of this in­dus­try that pre­vi­ously seemed ‘cast in con­crete’ to give way. Let us ex­am­ine five fac­tors that stand out in this re­spect:

In­creas­ing fo­cus on af­ford­able ticket sizes: Across most In­dian ci­ties, the fi­nan­cial ‘sweet spot’ for home­buy­ers is seen to be in the range of ₹ 50-70 lakh. In hy­per- ex­pen­sive Mum­bai, ticket sizes of around ₹ 1 crore are pop­u­lar with buy­ers be­cause of the higher wealth cre­ation and there­fore pur­chas­ing power there. How­ever, as of the third quar­ter this year, there has been a rise in apart­ments priced un­der ₹ 1 crore in Mum­bai, as well.

The pro­por­tion of in­crease in units launched in Mum­bai in the un­der ₹ 1 crore ticket size in­creased more than the pro­por­tion of the over­all rise in unit launches. Mum­bai serves as a good ex­am­ple to il­lus­trate the ris­ing af­ford­abil­ity trend be­cause it is the tough­est mar­ket in the coun­try, and yet could see more launches in this seg­ment. Other ci­ties will, there­fore, fare even bet­ter than Mum­bai in terms of de­creas­ing hous­ing ticket sizes.

To keep the price tags of their of­fer­ings at­trac­tive, de­vel­op­ers have been re­duc­ing the aver­age car­pet area of apart­ments across ci­ties. For ex­am­ple, the aver­age apart­ment sizes in Mum­bai and Ben­galuru have, in re­cent years, shrunk by 12% and 30% re­spec­tively.

Con­fig­u­ra­tions rev­o­lu­tion: When it comes to the most pre­ferred con­fig­u­ra­tions, 1 BHK

Pflats re­main the most pop­u­lar in Mum­bai, while 2 BHKs rule in most other ci­ties such as Delhi-NCR, Ben­galuru, Pune, Hy­der­abad, etc. Of course, af­ford­abil­ity is the main rea­son be­hind the pop­u­lar­ity of smaller flats in Mum­bai. Most of these smaller con­fig­u­ra­tions are priced around ₹ 1 crore, which is con­sid­ered ‘ af­ford­able’ by Mum­bai stan­dards.

More­over, sell­ing these units later on is eas­ier than sell­ing big­ger con­fig­u­ra­tions, as there are al­ways more peo­ple look­ing to buy 1 BHK flats in Mum­bai than there are units avail­able. In other ci­ties, the same logic ap­plies to the 2 BHK con­fig­u­ra­tion. As real es­tate in most ci­ties is cheaper than Mum­bai’s, home­buy­ers can af­ford to and do buy big­ger con­fig­u­ra­tions.

More de­vel­op­ers en­ter­ing af­ford­able seg­ment, PE play­ers will­ing part­ners: The Modi gov­ern­ment’s fo­cus on af­ford­able hous­ing has helped in mak­ing this seg­ment more palat­able to de­vel­op­ers. The erst­while aver­sion to be­ing tagged as ‘ low- in­come hous­ing builder’ has waned, and even larger play­ers are openly en­ter­ing this mar­ket seg­ment. There i s now con­sid­er­able po­lit­i­cal and so­cial goodwill at­tached to such a move, apart from its un­doubted busi­ness sense. Play­ers like Mahin­dra L i f e s p a c e, Tat a H o u s i n g , Shapoorji Pal­lon­jiGroup, As­setz Prop­erty Group, Pu­ra­vankara Projects, etc. are all en­thu­si­as­tic about en­ter­ing or ex­pand­ing their af­ford­able hous­ing port­fo­lios this year. One player – Emgee Group – is plan­ning an investment of ₹ 1,600 crore into AF­FORD­ABIL­ITY IS THE MAIN REA­SON BE­HIND THE POP­U­LAR­ITY OF SMALLER FLATS IN MOST IN­DIAN CI­TIES the af­ford­able hous­ing seg­ment over the next five years.

Pri­vate eq­uity play­ers are will­ing to part­ner with de­vel­op­ers op­er­at­ing in this space and fund such projects. Nisus Fi­nance Ser­vices, Brick Ea­gle C a p i t a l , Ave n u e Ve n t u r e Part­ners Real Es­tate, Car­lyle, Es­sel Fi­nance Ad­vi­sors and Mana g ers LLP, Prov­i­dent Hous­ing and In­ter na­tional Fi­nance Corp are some PE firms help­ing de­vel­op­ers with their af­ford­able hous­ing projects across the coun­try.

In­dia’s chronic dearth of af­ford­able projects is noth­ing short of leg­endary. How­ever, with s l ow­ing s ales i n t he lux­ury and premium cat­e­gories, af­ford­able hous­ing is now the one seg­ment which shows any kind of real prom­ise to open up rev­enue for de­vel­op­ers. Af­ter t he re­cent de­mon­eti­sa­tion move, land prices will plum­met – more so in the tier-II, III ci­ties and the fringe ar­eas of met­ros. This, too, will aid the cause of mak­ing homes more af­ford­able in In­dia. While de­vel­op­ers are al­ready con­struct­ing small­er­sized units on the out­skirts of ci­ties, the gov­ern­ment must step in by im­prov­ing the con­nec­tiv­ity of these out­skirts to re­spec­tive city cen­ters.

Ba­sic ameni­ties avail­able, ir­re­spec­tive of project size: Home­buy­ers ex­pect de­cent ameni­ties in their hous­ing projects, re­gard­less of whether they are town­ships or stand­alone build­ings. While town­ships of­fer many ameni­ties, suf­fi­cient park­ing, a small gar­den and play area, good security and power backup are now in­creas­ingly be­ing seen even in stand­alone res­i­den­tial build­ings. Buy­ers are no longer will­ing to set­tle for ameni­ties-starved projects and ex­pect the ba­sic fa­cil­i­ties even if their pur­chas­ing power is on the lower side. With more and more de­vel­op­ers of mod­est-sized res­i­den­tial projects heed­ing this de­mand, the rest have been left with no choice but to fol­low suit.

En­gag­ing on so­cial me­dia: Dis­sat­is­fied home­buy­ers have been us­ing so­cial me­dia ef­fec­tively to de­mand re­dres­sal to their grievances. De­vel­op­ers have re­alised the power of so­cial me­dia and many have started re­spond­ing to buy­ers’ posts or queries in real time. They have re­alised the po­ten­tial of tar­get­ing pos­si­ble buy­ers with ad­ver­tise­ments while they are on­line. In fact, most de­vel­op­ers have be­gun to re­alise that in­vest­ing in dig­i­tal mar­ket­ing is nec­es­sary in a mar­ket where buy­ers re­view all their op­tions on­line. The lack of a holis­tic, frame­work-based ap­proach and a vi­able rev­enue model are stalling large-scale smart city projects in In­dia, ac­cord­ing to Gart­ner, Inc. As a re­sult, many small pi­lot projects are un­der­way, but no big city­wide projects have been an­nounced. Gart­ner pre­dicts that through 2020, less than 10% of smart city projects im­ple­mented across In­dia will be of a large-scale, city-wide na­ture.

“While many In­dian ci­ties have an­nounced smart city projects, a struc­tured ap­proach in se­lect­ing these projects has thus far been miss­ing from most city coun­cils,” says Ganesh Ra­mamoor­thy, re­search vice pres­i­dent at Gart­ner. Fund­ing for smart cites will also re­quire se­ri­ous con­sid­er­a­tion. Gart­ner be­lieves that of the cur­rent fund­ing, only about 20% will be used for IT-based smart city prod­uct, so­lu­tion and ser­vice im­ple­men­ta­tion, while the re­main­ing 80% will be used for phys­i­cal in­fra­struc­ture de­vel­op­ment.

“The chal­lenge is the lim­ited bud­get of the city coun­cil, which does not re­ally per­mit the city to build, op­er­ate, main­tain and sup­port the en­tire smart city in­fra­struc­ture,” says Ra­mamoor­thy. “The lim­ited bud­get also lim­its the abil­ity of the city coun­cils to en­ter into a con­trac­tual agree­ment, which in­cludes a one-time im­ple­men­ta­tion fee, to build the ser­vice de­liv­ery in­fra­struc­ture,” he says.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.