Despite the lower-than-normal sales traffic in the real estate sector, the affordable segment has emerged as the hot cake for the wannabe homebuyers. Post-Unlock, the segment witnessed improvement in the number of visits to the site, and the properties sold immediately first because of the pent-up demand and realisation of people to own their home, the boost in sales got further boost when home loan interest rates came down to around 7 per cent. Looking at the response to affordable projects in the post-pandemic months and with some developers getting over-subscription in their projects, the year 2021 is going to be phenomenal for this segment.
Talking about the reasons behind affordable being the choice of the buyers, Pradeep Aggarwal, Founder & Chairman, Signature Global and Chairman, National Council on Affordable Housing, ASSOCHAM, says, “The affordable housing segment survived the onslaught merely because it caters to the price bracket that has maximum demand. Several factors worked in favour of affordable housing, including Rs 3.74-lakh crore liquidity infusion announced by the RBI on March 27, 2020, the CLSS extension announced in May, relief under EPF, etc. The biggest takeaway for the buyers, however, was the unprecedented cut in the repo rates, which resulted in home loan interests coming down to sub-7%. The tragedy also came as a blessing in disguise for the sector, especially the affordable housing segment, as the middle class was facing challenges in staying at rented accommodations. We have launched 19,200 units so far and intend launching 10,000 units by March 2021. As many as 5000 units are under the Haryana affordable housing policy, and another 5000 are under the Deen Dayal Jan Awas Yojana. We would be in a position to launch all 30,000 units by 2021.”
The turnaround after the COVID can be attributed to the fact that affordable housing is being promoted at war front with adequate support being extended to developers showing interest in this segment. To attract private participation, the government rolled out special incentives such as use permission, 50% additional FAR/FSI, concessional loans at priority sector lending rates and tax reliefs at par with affordable housing to develop ARHCs on their own available vacant land for 25 years.
The RBI was of the view that the Indian economy will register positive growth in the October-to-December festive quarter after six months of contraction if the economic upturn generated after lockdown sustained till the end of the year; this has proven to be true, with a fair amount of buyer’s interest being driven towards affordable housing. “After the Unlock was announced, we saw oversubscription in our projects that pointed towards the bright year ahead. The sector made a comeback in Q3 2020 with sales and new launches rebounding to almost 70% of the pre-COVID-19 levels. The affordable segment got maximum attention as it amounted to more than 60 per cent of the overall sales; the segment also saw a maximum number of new launches with 70% of the all the launches happening in this segment. The trend bodes well for the segment and encouraged by the response in 2020 more launches are likely to hit the market in 2021. We are also going to launch three more projects in 2021 in Gurugram,” says Rajat Goel, JMD, MRG World.
The performance of the segment can be gauged from the huge sales that happened post lockdown. Migsun Group, a leading real estate firm in Delhi-NCR, clocked sales of Rs 200 crore between October 1, 2020, and November 12, 2020; during the lockdown, the Group achieved the remarkable feat of selling 500 units worth Rs 252 crore between March 25 and June 3, 2020. “I would say that there is almost a 15 per cent increase in sales so far and the coming months will be better. Festival alone was not the reason as people’s trust in real estate has improved after the slew of measures taken by the government, decrease in EMIs, and understanding of real estate as a must-have asset. I would say that the mission ‘Housing for All’ is on the right track, and it is least affected by the pandemic roadblock. Five years after the implementation of PMAY (U) scheme, it has made steady progress across states, as around 1.06 crore homes have been sanctioned out of which 33% are completed while another 66.23 lakh units have been grounded for construction. All this means that affordable segment buyers will not have a dearth of projects to choose from,” said Yash Miglani, MD, Migsun Group.
The market for the affordable segment is looking quite promising, especially due to the optimistic economic growth being expected by the RBI. Also, the Apex bank has taken a number of measures that are going to have a positive impact on the overall sentiment of the real estate sector, and especially on the affordable housing segment as the buyers in this segment get affected by the changes in home loan interest rates the most. With home loan interest rates hovering around sub-7%, the affordable buyers are going to take advantage of the situation before the rates start to increase again. “In the coming years, affordable housing will prosper. People have realised the importance of owning a house, albeit a small, affordable one, during the pandemic and that is a positive,” Aggarwal concludes.