Low cost housing options in demand in Chennai
Chennai real estate market has turned out to be one of the most expensive real estate propositions over the years. Luxury segment and mid segment housing options are the fastest growing ones in the city and affordable housing which is nearly nonexistent within the city but fairly popular as you move to the city suburbs. . "Identifying developable land at the right price in the right place is the key to success of a budget housing project," said a builder from Chennai. "All developers doing big projects in the suburbs are stuck owing to poor sales and they are looking at alternatives to sustain the business", said Rajesh Babu, of Recs Group, a Chennai-based realty firm.
However the rising prices have only created a gap between demand and supply in the real estate market. This is forced the home buyers to deter from buying properties like apartments in Chennai. However experts suggest that these prices will come down over the years and the inflation will definitely come down. "Going by the experience of developers who promote budget housing projects, they are by and large cash-surplus projects as long as the promoter sticks to medium sized developments in the range of 2-3 acres. You can raise funds from the market (customers) and do projects. As long as the budget housing segment is treated as a separate entity and the money collected for it is used for the same project, it will work. But if the money is diverted to service bad loans or to complete other stuck projects, then things will miserably go wrong," said Sarita Hunt, MD- Jones Lang LaSalle.
Affordable housing will emerge as the next big thing in the Indian real estate market in general. With the NaMo Government promising "Ache Din" things are going to see a shift the next few years. With a promise of housing for every Indian by 2015, the government has a tall order of promises to follow. Luxury segment will grow at its own pace and mid segment housing will be restricted to apartments, row houses, gated communities or real estate in Chennai. However affordable housing is the one segment that builders and developers need to crack in Chennai. For now the low cost housing has a very high bracket in Chennai. In every sense of the word it is not exactly "affordable" for the income group they are looking to target. Will this huge gap between demand and supply be filled? This will determined by the next few years of the governance, a probably reduction in the cost of construction. REIT and its implementation will India will also have a huge impact on the affordable housing sector.
According to a top real estate portal IndiaProperty.com, there are only a limited number of project under INR 20 lakhs in the city. These is the segment that is under demand in the city. However with disconnect between pricing of affordable housing in one major concern this sector needs to address. Also many external factors have been responsible for the slow growth of this particular market segment.
However the rising prices have only created a gap between demand and supply in the real estate market. This is forced the home buyers to deter from buying properties like apartments in Chennai. However experts suggest that these prices will come down over the years and the inflation will definitely come down. "Going by the experience of developers who promote budget housing projects, they are by and large cash-surplus projects as long as the promoter sticks to medium sized developments in the range of 2-3 acres. You can raise funds from the market (customers) and do projects. As long as the budget housing segment is treated as a separate entity and the money collected for it is used for the same project, it will work. But if the money is diverted to service bad loans or to complete other stuck projects, then things will miserably go wrong," said Sarita Hunt, MD- Jones Lang LaSalle.
Affordable housing will emerge as the next big thing in the Indian real estate market in general. With the NaMo Government promising "Ache Din" things are going to see a shift the next few years. With a promise of housing for every Indian by 2015, the government has a tall order of promises to follow. Luxury segment will grow at its own pace and mid segment housing will be restricted to apartments, row houses, gated communities or real estate in Chennai. However affordable housing is the one segment that builders and developers need to crack in Chennai. For now the low cost housing has a very high bracket in Chennai. In every sense of the word it is not exactly "affordable" for the income group they are looking to target. Will this huge gap between demand and supply be filled? This will determined by the next few years of the governance, a probably reduction in the cost of construction. REIT and its implementation will India will also have a huge impact on the affordable housing sector.
According to a top real estate portal IndiaProperty.com, there are only a limited number of project under INR 20 lakhs in the city. These is the segment that is under demand in the city. However with disconnect between pricing of affordable housing in one major concern this sector needs to address. Also many external factors have been responsible for the slow growth of this particular market segment.
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