India is witnessing significant waves of inward urban migration in recent years. As employment is predominantly being generated in urban centres, there is a consistent demand for affordable spaces in urban centres. Shekhar Sarkar, a banker who shifted from Burdwan to Kolkata, told BE, “It was a real problem for me to find a nice place at an affordable price. I am presently living in a shared rental one BHK flat.”
According to a Deloitte report, the high percentage of migration from rural areas to cities has contributed to urban congestion and has put immense pressure on basic urban amenities such as water and sanitation. It has also triggered housing shortages in cities across India. According to the report, the country’s total urban housing shortage is projected to be about 30 million by 2022.
The Indian government estimated a shortage of more than 18.78 million homes at the beginning of 2012 of which 95% were in the Economically Weaker Section (EWS) category and also in the Low Income Group (LIG) segment. The gap is increasing between demand and supply and is forcing many urban citizens to live in slums. As there is a significant demand in the affordable segment, real estate organisations are also focusing on this segment. As this is a priority sector of the government, developers are receiving optimum support from the governmental agencies. This is helping developers to control the prices of these affordable homes. The Pradhan Mantri Awas Yojana (PMAY) scheme launched in December 2016 aims to provide 18 million urban homes and 30 million rural homes by 2022.
The affordable segment of the real estate sector in eastern India is experiencing real growth. Sachchidanand Rai, Chairman of Eden Realty, told BE, “Those who could not afford homes earlier have now come into focus. Now we are building for those people who need homes and can afford it too. Eastern India is a large unexploited market.”
The affordable segment generally targets first-time buyers. Builders must factor in the aspirations of this section. Generally, the projects in the affordable segment include playgrounds, clubs, swimming pool, gym, community facilities, and places for children. These projects are mostly very large, having around 2000 or 5000 apartments. These projects generally come up on the city fringes as it requires large areas of land. Recently, developers in this segment are also targeting semi-urban centres. Suburban locations around Kolkata like Barrackpore, Konnagar, Uttarpara and Chandannagar are also being explored. The same experience is also being replicated in other metropolitan cities.
The affordable housing segment is now losing its ‘down market’ label and turning into a serious and demandable sector. Knight Frank India, a real estate consultancy, has recently stated in its report that 71% of the total launches between January and June 2017 was priced below Rs. 50 lakh. This accounted for a significant 52% increase as compared to the previous year.
A prominent real estate company Motilal Oswal Real Estate (MORE) has recently raised over Rs. 575 crore through the closure of its fourth real estate fund called the India Realty Excellence Fund. The fund plans to deploy the capital in mid-income and affordable residential projects across six top cities in India while selectively investing in commercial projects. The new fund’s investment strategy will be an extension of the strategy of MORE’s two earlier funds. Such investments in the affordable segment reflect its prospects.