A country’s competitiveness and economic success depend largely on the comparative efficiency of its cities, with the quality, availability, and affordability of housing playing a critical role in it. Currently, the affordability of housing is at the forefront of discussions — and deals — across India’s real estate industry thanks to the recognition that “housing is fundamental to India’s balanced growth”. Affordable housing is not India’s problem; it can be a multifaceted solution to improve the infrastructure, employment, household wealth, health, education, poverty levels, maternal and child mortality, women’s participation in the workforce, and many other well-being indicators. India’s realty sector had lost the direction in the past due to a sustained mismatch in demand and supply, unjustifiable valuations and pricing, and the clear absence of a regulator. However, now, with key regulatory reforms having restored buyer confidence, the promotion of affordable housing has hit the right note, if the latent demand for such houses is anything to go by.
What happens next depends on developers
For well-funded developers, while the premium segment will help them perform in terms of shareholder expectations, affordable housing will drive the volumes and overall growth. Demand is high while the supply is limited due to the presence of fewer players. Last year, as per industry data, affordable housing grew by 22 per cent in sales even as the rest of the sector had a patchy growth.
I can see the immense potential in the affordable housing market, where housing for all by 2022 is a mission. Historically, there were fewer demands or ideas about what constituted basic or necessary facilities in such housing clusters.
But, in today’s context, it is not about income levels, but more about “integrated community living”, with the finest of township conveniences within the vicinity. Buyers, especially the millennials, are highly aware of amenities offered by large, expensive residential complexes and aspire to have the same facilities. But are these too aspirational for buyers of affordable housing? Are they supposed to get a mere four walls within 350 square feet of space and with power and water connections? This definition has to change with growing aspirations.
The need to offer that something more
I think the time has come for developers to walk an extra mile to provide more value in affordable housing. It is estimated that about 70 per cent of the buyers are salaried individuals while self-employed (10 per cent) and a mix of senior citizens and millennials account for the rest. Though many would consider affordable housing as an investment opportunity due to the locational price difference, a developer with a clear outlook can make a difference, attracting more actual users, thus leading to the success of such projects.
This is what will differentiate “value-focused” developers.
Millennial needs can set the agenda
Here, millennial homebuyers who prefer affordability with good location over larger-size homes in far-flung suburbs can influence developers. Perhaps to suit their taste and needs, apartment sizes across the top seven Indian cities have collectively shrunk by nearly 17 per cent between 2014-18.
Affordable and compact, yet luxury-tinged, housing could be a fast seller among millennials who need locational and financial flexibility besides modernity and investment advantages of home ownership. The opportunity is huge as shown by a CBRE Research; roughly 49 per cent of millennials live at home with parents, not because they love home cooking but for lack of value for money homes.
They must develop projects with a vision to become micro-cities that would provide jobs, shopping and entertainment besides a better standard of living and not mere homes with basic needs. First of all, if the project can provide locational advantages, it helps potential buyers who can avoid a long commute.
Then, an extra bathroom or a balcony in a space of 350 square feet can go a long way, being the “aspirational luxury” for such buyers. Smaller steps can lead to the success of affordable housing beyond the pricing factor or government sops. Sooner or later, affordable housing will hit a cul-de-sac unless developers and authorities make timely interventions to address the shortcomings at various stages of the value chain. While the primary responsibility is to provide shelter for all, especially in urban areas to prevent urban decay, developers must shoulder the task of taking home buyers to more comfortable and contented dwelling spaces.
Kamal Kheta is Chairman and Managing Director of Mumbai-headquartered Sunteck Realty.