There has been a 27 per cent jump in the launch of new affordable housing units in the first nine months of the year compared to the corresponding period last year, says a new study. The study was done in the top eight cities of the country.
More than 26,000 new units have been launched in 2017 so far. Of the total new launches in the affordable segment, 40 per cent were in Mumbai (10,500 units), followed by Kolkata and Pune. Hyderabad saw the biggest 813 per cent jump in the launch of affordable homes while Mumbai saw a 331 per cent increase.
However, overall residential unit launches recorded a decline of 33 per cent, at 60,000 units in the first three quarters of 2017 (January-September), according to a report by property consultant Cushman and Wakefield. “All cities, except Mumbai, saw a decline in new launches, mostly due to the introduction of Real Estate
(Regulation and Development) Act, or Rera, and implementation of Goods and Services Tax. Further, the first quarter of the year had rollover challenge of demonetisation (November 2016) to grapple with, leaving many developers no choice but to defer their launch plans,” the report said.
High-end and luxury segments witnessed significant drops in new launches of 66 per cent and 84 per cent, respectively, it said.
Mumbai saw one per cent jump in number of launches at over 19,400 units till September 2017. Mumbai was followed by Pune (8,400) and Bengaluru (8,200), both registering a year-on-year decline of 41 per cent and 48 per cent, respectively, in the total number of new residential units launched. Chennai saw the steepest decline in new launches, falling over 50 per cent in 2017 from the same period last year. The city only saw 2,700 new homes due to a massive slowdown in construction owing to prolonged political uncertainty and delayed notification of Rera in the state (Tamil Nadu).
Going forward, Cushman and Wakefield expects continued reluctance on the part of developers to start new projects owing to end-user caution. Meanwhile, developers will focus on reducing their existing unsold inventories through more attractive discounts, payment plans, freebies and gifts in order to take advantage of the current festive season during which end-users go on a buying spree, it said.
“Affordable housing is an attractive proposition both for developers and consumers as the demand is huge and largely unmet. The sharp focus of the central government has resulted in the availability of more funding options for the developers such as External Commercial Borrowings, Foreign Direct Investment and debt financing from national financial institutions at highly competitive rates. However, there are challenges for affordable housing projects in Tier-I cities, where land costs and availability within established locations are very difficult,” said Anshul Jain, managing director at Cushman and Wakefield.