The southern cities of Chennai, Bengaluru and Hyderabad witnessed the least activity in the affordable home segment over the past five years, according to a new study. While NCR and Mumbai Metropolitan Region (MMR) account for 55% share of total 6 lakh affordable units launched across the top 7 cities, the former saw maximum supply of such units.
Chennai: Within the affordable housing segment (units priced < Rs 40 lakh), Rs 20-30 lakh budget is predominant across most of the cities and accounts for 39% of the supply in the affordable housing segment. This is mainly in cities like MMR, Pune, Hyderabad, and Kolkata. The demand for this budget segment in MMR and Pune is driven by industrial developments in the cities.
While Kolkata is a price-sensitive market, the pharma industrial base in fringes of Hyderabad is driving the demand for this segment. Rs 30-40 lakh budget accounts for 35% of the supply and is dominant in cities such as NCR and the IT-ITeS hubs of Bengaluru and Chennai. With respect to affordable supply and unit sizes by budget segmentation in Chennai, the sub Rs 10-20 lakh segment, made up 12 per cent of the whole. The sub Rs 20-30 lakh segment made up 34 per cent and the sub Rs 30-40 lakh segment made up 54 per cent of the affordable supply.
Of the total 3.98 lakh units sold in sub Rs 40 lakh category, NCR & MMR hold 57% share. Pune came next with 1.13 lakh units launched and approximately 75,000 units sold in the affordable segment. It is the biggest shift that the Indian real estate market has seen so far. The previously ‘unaffordable’ real estate markets of NCR and MMR have led the thrust of affordable housing - in both new supply and housing sales - over the last five years. Anarock Property Consultants’ latest report ‘Affordable Housing: The Blue-Eyed Boy of Indian Real Estate’ confirms that these two regions contributed a whopping 55% share of the overall new budget housing supply between 2014 and 2018. The report, which was unveiled at the CII Real Estate Confluence 2019 in Mumbai on Friday, also finds that of the total number of units launched during this period, approximately 3.98 lakh were budget homes.
State-wise Housing Shortage
The study also takes into consideration the housing shortage across different states, the respective state’s contribution to India’s GDP and per capita income. As per 2012 statistics, Uttar Pradesh tops the list of states having a housing shortage with over 3 million homes and Maharashtra is the second with a shortage of fewer than 2 million units, followed by West Bengal, Andhra Pradesh, and Tamil Nadu. These top 5 states contribute 47% of the housing shortage in India.
Anuj Puri, Chairman - CII Real Estate Confluence 2019 and Chairman - Anarock Property Consultants, says, “The ‘Housing for All by 2022’ mission threw a much-needed lifeline to the affordable housing segment. The term ‘affordable’ has become respectable and builders, who earlier shied away from it, now hold huge portfolios in this category. This segment grew tremendously on the back of multiple sops introduced to both buyers and developers over the last five years.”
Affordable housing was given the coveted infrastructure status, and the very definition of affordable housing has been tweaked to accommodate more inventory under this key category. “The anticipated 8-10% annual growth of this segment is also luring investors,” says Puri. “Data further suggests that out of the total 15.3 lakh units launched across the top 7 cities between 2014 and 2018, affordable housing contributed about 6 lakh units - 39% of the overall supply. The rise in affordable housing supply has also helped improve sales numbers in later years, indirectly resulting in a 16% drop in unsold inventory between 2016 and 2018.”
AFFORDABLE SUPPLY AND INVENTORY TRENDS
While Kolkata is a price-sensitive market, the pharma industrial base in fringes of Hyderabad is driving the demand for this segment. Rs 30-40 lakh budget accounts for 35% of the supply and is dominant in cities such as NCR and the IT-ITeS hubs of Bengaluru and Chennai. With respect to affordable supply and unit sizes by budget segmentation in Chennai, the sub Rs 10-20 lakh segment, made up 12 per cent of the whole. The sub Rs 20-30 lakh segment made up 34 per cent and the sub Rs 30-40 lakh segment made up 54 per cent of the affordable supply.
Of the total 3.98 lakh units sold in sub Rs 40 lakh category, NCR & MMR hold 57% share. Pune came next with 1.13 lakh units launched and approximately 75,000 units sold in the affordable segment. It is the biggest shift that the Indian real estate market has seen so far. The previously ‘unaffordable’ real estate markets of NCR and MMR have led the thrust of affordable housing - in both new supply and housing sales - over the last five years. Anarock Property Consultants’ latest report ‘Affordable Housing: The Blue-Eyed Boy of Indian Real Estate’ confirms that these two regions contributed a whopping 55% share of the overall new budget housing supply between 2014 and 2018. The report, which was unveiled at the CII Real Estate Confluence 2019 in Mumbai on Friday, also finds that of the total number of units launched during this period, approximately 3.98 lakh were budget homes.
State-wise Housing Shortage
The study also takes into consideration the housing shortage across different states, the respective state’s contribution to India’s GDP and per capita income. As per 2012 statistics, Uttar Pradesh tops the list of states having a housing shortage with over 3 million homes and Maharashtra is the second with a shortage of fewer than 2 million units, followed by West Bengal, Andhra Pradesh, and Tamil Nadu. These top 5 states contribute 47% of the housing shortage in India.
Anuj Puri, Chairman - CII Real Estate Confluence 2019 and Chairman - Anarock Property Consultants, says, “The ‘Housing for All by 2022’ mission threw a much-needed lifeline to the affordable housing segment. The term ‘affordable’ has become respectable and builders, who earlier shied away from it, now hold huge portfolios in this category. This segment grew tremendously on the back of multiple sops introduced to both buyers and developers over the last five years.”
Affordable housing was given the coveted infrastructure status, and the very definition of affordable housing has been tweaked to accommodate more inventory under this key category. “The anticipated 8-10% annual growth of this segment is also luring investors,” says Puri. “Data further suggests that out of the total 15.3 lakh units launched across the top 7 cities between 2014 and 2018, affordable housing contributed about 6 lakh units - 39% of the overall supply. The rise in affordable housing supply has also helped improve sales numbers in later years, indirectly resulting in a 16% drop in unsold inventory between 2016 and 2018.”
AFFORDABLE SUPPLY AND INVENTORY TRENDS
- The current urban housing shortage in India is about 18.78 million homes
- Total supply of affordable housing across the top 7 cities between 2013 to 2018 was around 7.65 lakh units while total absorption is estimated to be 5.95 lakh units.
- NCR, MMR, and Pune account for the top three active markets in terms of supply and absorption owing to the high rate of urbanization and industrial developments.
- New policy reforms and schemes announced by the central government over the last few years for the affordable segment seem to have resulted in increased new supply and demand in the category.
- The unsold inventory of affordable units was around 2,38,750 units against the total of 6,73,000 as of December 2018 accounting for 35%.
- Only 13% of the unsold inventory in the affordable segment is ready-to-move-in, while another 41% is expected to be completed in the next 2 years