The real estate market is struggling to beat low demand for expensive property, particularly in areas within Ahmedabad city. But the demand for apartments priced at less than Rs20 lakh, even if they are located in places slightly far-off from the city centre, remains high. Almost all developers in the city with affordable housing schemes report good response from buyers.
More than 15,000 affordable residential units will be made available through various housing projects launched in the city in the last two years. Although a majority of these projects are located on the outskirts of the city, they have received phenomenal response from buyers.
The response to the inexpensive housing scheme launched by Tata Housing in partnership with Arvind Real Estate is indicative of the kind of demand that exists for low-priced property. For the 1090 units on offer, the company has received 10,000 applications from interested buyers.
Bakeri Group, which has built several affordable housing units in the city, believes that growth in demand for low-priced houses has always remained constant. Pavan Bakeri, managing director of Bakeri Engineering and Infrastructure, said that the demand for affordable property is real and, for this reason, it is not vulnerable to saturation.
“The demand in this segment does not go up with a boom or decline during a slump,” said Bakeri. It is believed that more than half the shortfall in the number of houses needed in the city is in the low-priced category. Kintan Soni, director of Svasaar Value Builders, says there is tremendous demand for low-priced property in the city.
“Last year, before launching the scheme, we had done a survey in which we found that in suburban areas such as Narol, Lambha and others there is demand for 30,000 affordable houses, in range of Rs5 lakh to Rs15 lakh,” Soni said.
People are evidently looking for value for money. “We received good response as we had surveyed the market and launched a product that suits people’s aspiration and capacity to pay,” said Rajeeb Das, marketing head of Tata Housing.
The high cost of land and construction has made property unaffordable for lower income groups, said Umang Thakkar, chairman and managing director of Dharmadev Infrastructure.
"Incomes in the city have gone up but not in tandem with realty prices. It has become difficult for the salaried class earning Rs25,000 per month to buy a house in the city," said Thakkar.
Rising land and construction cost is a challenge for developers to come up with affordable housing schemes that are also profitable for them. Developers want government intervention to make affordable housing schemes viable.
Builders have been demanding a special scheme under which construction material and processes would be exempted from VAT and Service Tax. They also want profits earned from low-priced housing schemes to be exempted from income tax.
Further, the developers also want the central government to allow ECB for all affordable and rental housing projects, and give Section 35 exemption for affordable housing projects where land with building is defined as capital investment. High rents that have to be paid each month if you do not own the apartment you live in, as well as the simple wish to have a house of one's own, keeps demand for low-priced housing high. Lower income groups find it easier to pay EMI for such property instead of high rent.
Falgun Mehta, director of Aroma Realty, said that people think it is better to pay EMI than to pay rent. "Even getting finance for low-priced homes is not difficult," he said. Further, the growing trend towards nuclear families is also responsible for the high demand for affordable housing in Ahmedabad. More people prefer to live in small houses in a nuclear family than in big houses in a joint family. Moreover, people from other states also go for smaller 1RK or 1BHK houses, said Thakkar.