90% developers to continue building low-income houses: Deloitte

This comes on back of developers reporting that their profits meet their expectations

There is an increased interest in supplying housing and housing finance to low-income customers, but the gap between supply and need is huge.

Developers are building smaller formats (eg: One room-kitchen) which are more affordable. Homes build in such formats, sell 25% faster compared to larger formats.

According to a Deloitte report released last month on the 'Low-Income Housing (LIH) Market', 90% of the surveyed developers said that they plan to continue building LIH.

About 58% of the developers reported that their profits met expectations. And, 86% of the developers also said that they were happy with the profit margins of their LIH projects.

Developers are borrowing strategies from traditional real estate business to improve their realisation. For instance, 61% developers said that they release their supply in a staggered manner to hedge against rising costs, and 71% of them said that their plan their projects in a phased-wise manner.

At least 30,500 units below Rs. Ten lakh have been launched in 132 projects across 22 cities in the period of June 2011 to January 2012. Out of the 22 cities, Ahmedabad, Mumbai and Indore have developed well with over 20 projects in each city providing housing below Rs. Ten Lakh, thereby offering choice of locations and developers to customers.

In addition, developers are also exploring new construction techniques but examples of actual usage are very few.