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AFFORDABLE HOUSING IS THE MOST PREFERRED INVESTMENT ASSET CLASS

AFFORDABLE HOUSING IS THE MOST PREFERRED INVESTMENT ASSET CLASS

As per recent research, affordable housing has emerged as the most preferred investment asset class post-Covid-19, accounting for over 40 per cent share as against 31 per cent during pre-Covid-19. Here is a report According to ANAROCK’s Consumer Sentiment Survey, affordable properties (less than Rs 45 lakh) emerged as the most preferred investment in the post-Covid-19 survey, accounting for over 40 per cent share as against 31 per cent in the pre-Covid-19 survey – an increase of nine per cent. “Amid the uncertainties of Covid-19, home ownership became a priority – even the millennials who previously shied away from buying a home looked at real estate as a serious investment. Besides the growing demand, new supply in this category has also increased from the last two years. Of the total new supply of nearly 3.65 lakh units across the top seven cities in 2019 and 2020 collectively, over 37 per cent was in the affordable category,” says Anuj Puri, chairman, ANAROCK Property Consultants. Reasons for its popularity “The value-housing category has been attracting a lot of traction from buyers because: Affordable housing enjoys various incentives such as interest subsidies and tax benefits. For instance, in the 2019 Budget, the central government provided an additional income tax deduction of up to `1.5 lakh for home loans to purchase affordable housing. Now, the eligibility of this tax deduction has been extended till 31 March 2022; For individual investors keen on earning rental income, affordable homes are turning out to be a good bet with rental yield anywhere between five and seven per cent, depending on location, property-type, etc; Unlike earlier, top developers are now coming forward to tap into the underlying potential of the affordable housing segment that was long underserved; GST is presently calculated at one per cent, while for others, it is five per cent minus ITC benefits,” adds Puri. Role of private developers By actively tweaking policies and introducing sops from time to time, the government has made the affordable housing segment attractive. “Affordable properties get faster conversion compared to luxury properties as most first-time home-buyers and millennials lack capital funding to afford properties above Rs 45-50 lakh. Also, developers are now focused on bringing a product that fits demand, and there’s no denying that affordable segment tops buyer demand,” mentions Rohit Poddar, MD of a leading real estate company in India. Recent government initiatives and historically low home loan interest rates have created a positive business environment, believes Vimalendra Singh, chief sales officer of one of the most reputed residential property developers in India. “The value-housing segment remains relatively underserved, with demand driven by growing urbanisation and rising lifestyle aspirations. First-time home-buyers are now far more discerning and prefer self-contained residential projects with ample features to meet their aspirational living needs. Covid-19 has resulted in pent-up demand for quality housing in leading metros and the extension of tax exemption deadline will further incentivise home-buyers to go forward with their purchase decisions,” adds Singh. Challenges plaguing the sector While Government of India has undertaken several initiatives to promote the development of good quality affordable housing, several issues are slowing down the sector. “The lack of availability of low-cost land has been a key challenge in the development of affordable housing units, particularly in urban areas. Depending on project location, land costs can vary anywhere from 20 to 60 per cent of the total project cost. On the other hand, areas with lower land costs that make the development of affordable housing more viable, are often situated in peripheral locations with inadequate infrastructure and therefore, housing developed in such areas has limited marketability. Also, buyers of affordable housing are typically price-sensitive, which results in low pricing flexibility and limited scope of marginal expansion for the developer,” elaborates Mahi Agarwal, assistant vice-president and associate head, ICRA, an independent credit rating agency. The way ahead Affordable and mid-segment homes will continue to drive demand in residential real estate in the times to come. As per ANAROCK Research, top seven cities presently have a stock of over 2.27 lakh units in the affordable category (less than Rs 45 lakh). “Accelerating urbanisation, growing nuclear families, strengthening home ownership aspirations, and softening of interest rates are expected to boost supply and absorption of homes across metros. Leading metros have recorded a higher share of affordable unit sales in 2021, and this trend is likely to continue on the back of healthy demand dynamics,” concludes Singh. Source - Times Property

Publisher Name: Times Property

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