Demand for housing may go up to 42 lakh units for 8 cities
About 10 lakh units by developers to be delivered by 2020
The total demand for urban housing is estimated at 42 lakh units during 2016 to 2020 across top eight Indian cities, says a report by Cushman & Wakefield and GRI entitled Revitalising Indian Real Estate: A new era of growth and investment.
Existing under-construction and planned supply of 10 lakh housing units by private developers is also expected to be delivered across top eight cities during the period. Delhi-NCR (NCT, Ghaziabad, Faridabad, Gurgaon and Noida) continues to garner the highest proportion of demand (24%) at around 10 lakh units by the end of 2020.
Lower income group or LIG (below `15 lakh) is the most under-serviced segment. While the demand generated here is likely to be about 19.8 lakh units by 2020, supply by private developers will be limited to barely 25,000 units.
Similarly, though the middle income group or MIG (`15-70 lakh) accounts for 63% of the total housing supply across eight cities between 2016 and 2020 at 647,000 units, the demand is estimated to be a much higher 1,457,000 units.
“At the ground level, despite demand grossly outstripping supply, there is a considerable proportion of unsold inventory in the MIG and HIG categories, which are not absorbed as these properties are unable to demonstrate value for their buyers. Such units fall out of preference either on account of higher-than-expected prices or due to locations.
Lack of funds and high land and development costs are the primary reasons for developers not opting for smaller sized units closer to city centres as profitability drastically reduces. Despite encouragement from the government through taxation and funding relief, under the Housing for All 2022 vision, top cities of India have not seen a significant shift in supply for reduced sized apartments within the MIG or LIG. Further, with the recent move to demonetise large currencies in order to crack down on black money, the demand for HIG and luxury housing could temper further.
This is expected to propel developers to recalibrate their plans to suit the high demand segments of affordable housing.” says Anshul Jain, managing director, India, Cushman & Wakefield.
“To be able to utilise the opportunity of the shortfall in supply to demand, private developers will need to change their approach and bring in better strategies, systems, technology and funding options. Some international development companies are actively scouting the various local markets to identify the right opportunities for themselves,” he says.