Real estate firms for middle-order buyers
Now that the margins provided by low-income homes are insufficient and there are not many buyers of luxury residencies, developers have found the most lucrative deals in the middle-income housing schemes. These are the projects in which customers are ready to invest Rs25-50 lakh for their own house.
Out of developers who have lately rolled out housing projects for middle-income groups are Shapoorji Pallonji Real Estate, Hiranandani Group and Puravankara Projects Ltd.
According to Venkatesh Gopalkrishnan, Chief Executive Officer, Shapoorji Pallonji Real Estate, part of the Shapoorji Pallonji Group that is involved in building Rs30-60 lakh homes. “More and more builders are now trying to build in the MIG (middle-income group) price bracket because they have the right balance of high demand and profitability of margins. It is tough for private developers to maintain the margins in LIG (low-income group) housing. However, one needs to venture into it as a long-term, 6-10 year business, and not just as a market reaction”.
Braving all that confronts those building LIG homes—remote project sites, weak infrastructure, feeble margins, lack of mortgage facilities; easy-to-reach location, compact homes and prices have caught the attention of MIG buyers. As far as builders are concerned, the sector is profitable in terms of sales even during the period of unexpected slack in the realty sector.
A flurry of government schemes and policies have supported housing in this price bracket thereby motivating the belief of buyers and developers all the same.
Hiranandani Communities, having two holistic townships in Panvel and Chennai, is working on the lines of building 2,000 500 sq. ft homes, priced at Rs30 lakh per unit at Hiranandani Fortune City, Panvel. Hiranandani has always been known to construct premium and luxury homes as of till date.
Chairman and Director, Niranjan Hiranandani says, “As you reduce the price points and customize the size of homes to fit the buyers’ budget, the number of customers goes up. The luxury residential market has got exhausted, and this is a natural choice”.
Between July and September, an overall 64,781 home units were closed on sale in eight top cities, out of which 23,493 units belonged to the Rs25-50 lakh price class and 12,136, were in the below Rs25 lakh genre, as per Liases Foras Real Estate Rating and Research Pvt. Ltd. The report also states that even homes in the Rs50 lakh to Rs1 crore bracket are raking up a decent demand, with 18,682 units sold.
The government declared an interest subsidy on home loans for MIG dwellings in September 2017. In November the same year, the Union cabinet expanded the carpet area of homes belonging to the category of the government’s affordable housing scheme. This is good news for homebuyers, with yearly earnings from Rs6 lakh to 18 lakh. This makes way for them to go for bigger, ready-to-move-in houses at cheaper prices.
Real estate companies such as, Shriram Properties Ltd and Ruparel Realty have launched multiple projects in the pipeline for the coming months in 2018.
Bengaluru’s Puravankara Projects Ltd intends to roll out 9-10 million sq. ft homes in the Rs30-50 lakh category in South India, under its value housing firm Provident Housing.
This spells fruitful prospects for first home buyers not just because of the pricing, but also the types of homes and features they are offered. Generally, big and famed builders are into luxury homes, but lately they are making a beeline for the affordable home segment, opines the Managing Director Ashish Puravankara.
Constructing homes below Rs20 lakh is taking the bull by the horns, as far as infrastructure is concerned. Middle-income homes suit buyers as builders are turning judicious and feeding customers’ needs at reasonable price tags.