Affordable Housing
For The Middle Class
- by Kishor Pate,
CMD – Amit Enterprises Housing Ltd.
Affordable housing,
though a widely-used term in India, actually means different things to
different sets of demographics. The definition of ‘affordable’ is heavily
influenced by the socio-economic variables that drive a certain city or
location. For the Indian market, affordable housing would usually
refer to residences which are designed for
the economically weaker section (EWS) of society, so that they
can enjoy the comfort and security of self-owned homes as much as the middle
class.
There is no doubt
that economically weaker section in India did not get
the required impetus in earlier years. However, with the current government
coming into power, it has been made clear that a significant change is being
aimed at. The EWS is also India’s thickest part of the income pyramid and being
the base of our economy, their requirements and living standards need to be
taken seriously. We are now seeing visible progress on this front.
The BJP government has
undertaken several initiatives to boost re-development of older buildings while
supporting high-grade infrastructure for the peri-urban locations. The
objective is that the working population should not have to move out
of their city to go to work every day. Commute time and accessibility has been
a key factor behind the development of low cost housing in the land
parcels located on the periphery of cities.
But affordable housing also
has a larger ‘local’ meaning – namely, housing which
is affordable to the largest segment of potential home buyers in a
city. The target buyer base for affordable housing in a city can
be that section of the local population which,
though not economically challenged, is nevertheless sensitive to
high budget overruns. Such buyers have sufficient budgets not to have
to live on the extreme outskirts, but are still challenged to find homes that
are affordable to them.
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| Kishor Pate, CMD – Amit Enterprises Housing Ltd. |
In other words, if
there is a deficiency of new properties in city locations for buyers
whose budgets do not exceed Rs. 30-40 lakh, a city is suffering from
an affordable housing deficit even if it has a massive supply of
homes priced within Rs. 20 lakh on the extreme outskirts. Buyers who can afford
to spend more than this will not consider moving their families to
the peripheries, yet the available options in better locations exceed their
budgets.
If a large part of a
city's working and earning middle class cannot afford to buy good homes, there
is a dearth of affordable housing. Projects like
AEHL's Colori, which offers fully-loaded 1 BHK flats for an
all-inclusive price of Rs. 28.9 lakh in Pune’s Undri are aimed
squarely at meeting this demand. However, more developers must step in to
provide such budget housing where it is needed the most in India’s
larger cities.
There is sufficient
business rationale for affordable housing projects, which have
consistently seen high rates of
absorption. Affordable housing is indeed a positive
solution not only for the socio-economic growth but the real estate
business too. The demand is exceptionally high, and developers who have stepped
into this realm of real estate development will be able to sell their projects
for years to come.
While a lot of work
and policy-driven growth is still needed in
the affordable housing segment, it is nevertheless proving to be
the most sustainable business model for the industry. Developers of such
residential projects will never face the impacts of inflation or other economic
setbacks. The demand for affordable housing has been constantly
growing irrespective of the economic conditions.
Another direct
implication of the growing demand of affordable housing is the
rising interest from real estate investors. More and more investors are now
putting in their money into budget homes, attracted by the healthy demand.
These factors clearly
indicate that affordable housing as a business vertical has
stood the test of time, even as costlier luxury homes segment are facing a hard
time in the current scenario. Builders who have tasted success by proving
much-needed affordable housing are therefore encouraged to cater
even more to this segment. In short, affordable housing is both
an excellent way of leveraging brand value but also a means of ensuring
immunity to market slowdowns.
About
The Author
Kishor Pate,
Chairman & Managing Director of Amit Enterprises Housing Ltd. is the driving force behind
one of the most successful real estate development firms in Pune and beyond.
Most recently, AEHL has launched highly successful affordable housing projects like Astonia Classic and Colori in Undri
and the Mediterranean-style township Astonia Royale in
Ambegaon.
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