Premium realty players flock to affordable housing as prices rationalise

Last year, Sunteck Realty sold almost 2,000 flats at its Naigaon project in Mumbai in just under a month. 

The flats, priced around Rs 25 lakh, were a switch in strategy for the premium real estate player that launched the first luxury project in the Bandra-Kurla Complex (BKC) in 2013. The BKC apartments range from Rs 25 crore to Rs 100 crore. 

Like others, the company now sees greater potential in Mumbai’s affordable home segment for a variety of reasons. 

“Mumbai probably has more slums than any other metro in the country and that in itself would push consumers to aspire for better modern housing,” said Kamal Khetan, Sunteck’s chairman and managing director. He added that Sunteck is set to kick off phase 2 of its Naigaon project called Sunteck West World and will first launch 2,500 affordable apartments priced between Rs 35 lakh and Rs 60 lakh with bookings opening in January. 

Sunteck isn’t alone in the chase for aspirational home buyers for flats under Rs 60 lakh that are sized around 60 square metres. In Bengaluru, the Brigade Group, which has built luxury homes and villas, announced its entry into affordable housing last year. According to analysts, its upcoming projects are expected to account for as much as half of the company inventory. 

Anuj Puri, chairman of Anarock, said recently the Runwal Group sold 1,000 apartments in Dombivili priced around Rs 29 lakh in less than a month. “This pace of sales is finally happening at price points that they should have been and it is doing so for a couple reasons,” Puri said. 

He added, “For one, there is a growing number of people who are either employees of Uber or work in similar industries and see owning a home in Mumbai as aspirational and the second is that prices have rationalised.” 

Consumer audiences do vary across geographies. In Naigaon, it’s a combination of professionals who work in call centres of back offices of banks, the film industry and millennials, said Khetan.

Niranjan Hiranandani, managing director, Hiranandani Group said 90 per cent of affordable housing is taking place in the peripherals of major metros that include Mumbai, Pune, Bengaluru, and Chennai. “This segment is doing extremely well because of the 1 per cent GST for affordable homes, interest subventions and lower stamp duties,” he added. 

Additionally, developers have also slashed the amount of margins on such housing. “What used to be between 50 per cent and 100 per cent is now around 25 per cent. This greatly benefits the consumer,” said Khetan.

Recently, the government had announced a Rs 25,000 crore stimulus package for the real estate sector under which Finance Minister Nirmala Sitharaman said the intitiative would revive over 1,600 stalled housing projects covering 4,58,000 units. 

The government would infuse Rs 10,000 crore into the real estate market to revive stalled projects and Life Insurance Corporation (LIC) and State Bank of India (SBI) would contribute another Rs 15,000 crore. The funds will be used to provide priority debt financing for completion of stalled projects in the affordable and middle-income housing sector.