Wednesday, December 10, 2008

Developers are now reworking their strategy to target middle-class clients looking for smaller houses outside BMC limits

The realty market is stagnant and work on several under-construction residential projects has slowed down, but several builders claim brisk sales in smaller places like Thane, Virar, Panvel and even Nashik.

Runwal Group:
"We were not seeing any great demand for premium flats but our study showed a good demand for budget housing,'' he said. "Housing loans below Rs 20 lakh being in the priority sector means consumers get a double benefit in terms of a reduced interest rate as well as a more affordable pricing,'' said Sandeep Runwal, Runwal Group.

"About 60% of the city's population earns less than Rs 2-Rs 3 lakh a year. There is no housing project for them,'' said Boman Irani of Keystone.

Another developer, Akruti, has changed its plan to set up a commercial building on Thane's Pokhran Road No 1; it has decided on a budget residential project with compact houses.

The developer will soon launch its Just Perfect Homes project with 1-BHK and 2-BHK flats, worth Rs 21 to Rs 25 lakh, in Thane.

PRA Realty:
The US-based PRA Realty is for the first time tapping the market for affordable housing in Pune, Nagpur and Nashik.

"The trend earlier was high-end construction. But developers are downsizing projects now,'' PRA managing director Rustom Bharucha said. PRA's proposed housing project on a 130-acre plot in Nagpur is looking at selling 1-BHK and 1.5-BHK flats priced between Rs 10 lakh and Rs 12.5 lakh.

Tanaji Malusare City, a Matheran Realty project, claimed to have received 66,000 applications early this year for its phase-one sale of 3,000 units in Karjat. About 40% of these are 300-sq-ft flats selling for Rs 3 lakh each.

"Unexplored'' territory:

The salaried class found itself pushed farther away from the city with housing becoming virtually unaffordable during the boom. But, now with negligible sales and the market facing a liquidity crunch, industry experts say many builders are looking at this previous "unexplored'' territory.

It's possible!

A report on low-income housing in urban India, prepared by management consulting and merchant banking group Monitor Group, says it is possible to build for lower-middle class urban customers even with the current land prices and construction rates.

Within an hour of the city centre:

"Private-sector developers are building housing at Rs 800 to Rs 1,000 a sq ft in vibrant neighbourhoods within an hour of the city centre in most metros and towns. The smallest units they are currently building are 450-sq-ft to 500-sq-ft.

Flat for Rs. 2.50 to 3.20 lakh:

But a number of developers in cities like Ahmedabad, Jaipur, Mumbai, Hyderabad, Kolkata, Kolhapur and Vizag confirmed they could build smaller flats-250-350-sq-ft apartments-at Rs 2.50 lakh to Rs 3.20 lakh,'' the report, prepared for the National Housing Bank with support from the World Bank in 2007, pointed out.

Low-income housing in Mumbai:

Developers, however, said the concept of low-income housing would not work in Mumbai. "Land is expensive, cost of construction is high and the floor-space index is capped,'' developer Subodh Runwal said. "The definition of a low-income house in Mumbai is a 300-sq-ft flat that costs less than Rs 5 lakh. Developers will not step into this segment unless they are assured of a reasonable margin,'' he added.

Housing expert Chandrashekhar Prabhu said it was not the job of private developers to provide low-cost housing. "All over the world, including the US, it's the local authorities who provide for such housing,'' he said. In realty, smaller is better

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