Affordable homes in India dwindle to seven-year low: report
The trend is likely to get more entrenched as a slew of Indian developers ditch affordable homes in favour of premium housing projects
[NEW DELHI] India’s supply of houses costing less than five million rupees (S$74,555) fell to their lowest since 2018, a Knight Frank report found, signalling that the trend of developers pivoting away from this segment continues.
The affordable segment saw supply of new housing units plunge to 30,806 in the six months to June, the real estate consultant said in the report last week. The share of this segment in total housing sales has dropped to 22 per cent over this period, versus 54 per cent in the first half of 2018.
The recent trend of the market shifting towards pricier and larger homes is due to buyers seeking a better lifestyle and better margins for developers, according to Vivek Rathi, national director, research at Knight Frank India.
The trend is likely to get more entrenched as a slew of Indian developers, from Mahindra Lifespace Developers to SignatureGlobal India, ditch affordable homes in favour of premium housing projects.
“Rising land and construction costs, coupled with regulatory price caps have made it increasingly difficult for many developers to sustain projects in this segment,” Pradeep Aggarwal, chairman at SignatureGlobal said.
The northern state of Haryana for instance, which neighbours the capital city of New Delhi, has a ceiling of 5,000 rupees per square feet on affordable housing units in designated zones. The rule is aimed at keeping home prices low for the masses but curbs developers’ earnings.
SignatureGlobal, which has made 21 affordable housing projects in Gurgaon in Haryana in the past decade, is now focusing on homes priced above 20 million rupees.
Mahindra Lifespaces plans to exit this segment and will not have any affordable housing projects on its books by March 2030, according to a local media report. BLOOMBERG
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