Chanting the affordable mantra
The Financial Express, February 08, 2009, Page 11
Preeti Parashar
The wait of many to own an affordable house is finally over. With interest rates slashed for home loans up to Rs 20 lakh and real estate developers shifting focus to affordable housing, this is the right time to purchase your dream home. Where a few months ago the developers were investing heavily into luxury housing projects, now majority of them have announced their long term investment plans for affordable housing.
Affordable announcements
DLF Home Developers, wholly owned subsidiary of DLF Group has already announced an investment of Rs 15,000 crore over the next three years to develop various residential projects across the country in Rs 15-40 lakh range. The plan is to construct about 40,000 housing units in the mid-income category. An official from DLF Homes said that the company will now be focusing on developing houses, which are affordable for middle and upper middle class. “The major factors that have affected the realty business include the economic slowdown as well as an over supply of housing options in the top-end category of the market. So the lower segments which remained untapped are now being focused upon,” says the official.
He further adds, “Developers are willing to squeeze their margins and will be developing affordable housing units by reducing the size and specifications and offering one or two bedroom apartments.” The investors are slowly returning to the market as the developers have reduced their project prices and are offering lucrative deals. Where on an average two bedroom apartments were priced between Rs 35-40 lakh, now the prices have come down to about Rs 15-35 lakh.
On the other hand, Omaxe Constructions plans to invest around Rs 8,000 crore over the next five years in affordable housing projects. DP Srivastava, Director, Omaxe Constructions says, “We have plans to develop over 10,000 houses in the first year with an investment of Rs 1,000 crore. Overall the apartments will be ranged between Rs 5-10 lakh and Rs 10-20 lakh categories. In the present scenario about 90% people can afford a home in the price range of Rs 5-15 lakh.”
As the company has created a land bank of about 700 acre of licensed land, with 1,000 acre in the process of acquisition, the plan is to build affordable housing projects across the country. Srivastava further adds, “We are planning to launch five projects under the affordable housing category by March in Madhya Pradesh and Uttar Pradesh. But due to low market sentiments there has been a delay in launching these projects. Yet we are hopeful of delivering the half-finished apartments by year end.”
Small city offerings
Developers are offering lesser value additions in the apartments than before to make up for the reduced prices. RP Malhotra from Dee Ess Estates says, “The developers that used to offer fully-furnished apartments are now offering the basic model. The high-end projects are still not able to find buyers whereas the affordable houses in the range of Rs 10-20 lakh will soon see a jump in sales.”
Sandwoods Infratech, after developing two luxury housing projects in the northern region has moved on to develop studio apartments priced between Rs 6.22 and Rs 6.55 lakh. Taking care of the basic needs of the middle income group the company is offering 360 one-room apartments in Baddi, the industrial hub of Himachal Pradesh. SK Bagolia, Managing Director Sandwoods Infratech says, “We are coming up with a five-storey building — Sandwoods Heights in Baddi and the apartments have been priced keeping in mind the needs of the service class as well as the skilled class. We are also scouting for space in Shimla to launch another affordable housing project.” Apart from attractive offers for prospective home-owners, the company has launched a scheme for investors looking for opportunities in Himachal Pradesh. Here, Sandwoods Infratech will rent out apartments and offer guaranteed monthly returns to investors. In the down payment plan, the investor has to make an upfront investment of Rs 6,00,000 to purchase the apartment. The company will then guarantee payment of Rs 3,000 per month in return to the investor starting immediately after booking for a lock on period of five years. In the construction linked payment plan, the investor can pay just 15% of the price upfront, with bank loans available for the remaining amount. Here, the company will pay the EMI to the bank till the completion of construction (approximately two years) and then guaranteed monthly returns of Rs 3,000 per month for a lock in period of further three years.
Another player — Taneja Developers & Infrastructure is investing close to Rs 500 crore on reasonably-priced housing projects in Punjab. Coming up in Mohali, TDI City is offering two bedroom apartments at Rs 14 lakh and 17.5 lakh. “We have got 500 units booked out of the total 700 offered. Phase II of this project has also been launched over 200 acre of land which will be developed into an integrated township. Other housing projects are coming up in Jalandhar, Panipat, Sonepat and Kundli,” shared Amit Batra, Regional Head, TDI.
Considering the fact that people are now preferring to buy a house rather than staying in rented apartments, the developers are offering flats ranging between Rs 12 lakh to Rs 20 lakh. Sanjeev Narang from Raglan Infrastructure says, “We are offering two Bedroom flats at Rs 12.71 lakh, three bedroom at Rs 15.61 lakh and four bedroom at Rs 20.51 lakh in Gulmohar City project at Derabassi. About 325 bookings have been made out of 450 flats offered. Even though sales have slowed down now but we will hand over the possession in November this year.”
On the contrary, the recession seems to have increased the demand in Baddi industrial belt. And the developers are planning to convert their projects into low-cost housing projects. SK Bajaj from Shakun Infrastructure, Baddi says, “Developers here have submitted plans to change over to affordable housing. Surprisingly, in the last 2-3 months the demand has picked up and one and two bedroom apartments are selling like hot cakes. We had offered 40 one-room sets and all units were sold within a month. One room apartments range between Rs 6-6.5 lakh and two bedroom flats between Rs 7.5-8 lakh.”
The global economic slowdown has hit the realty sector hard. But by offering affordable housing to the customers the developers are confident of sailing through these turbulent times.
The Financial Express, February 08, 2009, Page 11
Preeti Parashar
The wait of many to own an affordable house is finally over. With interest rates slashed for home loans up to Rs 20 lakh and real estate developers shifting focus to affordable housing, this is the right time to purchase your dream home. Where a few months ago the developers were investing heavily into luxury housing projects, now majority of them have announced their long term investment plans for affordable housing.
Affordable announcements
DLF Home Developers, wholly owned subsidiary of DLF Group has already announced an investment of Rs 15,000 crore over the next three years to develop various residential projects across the country in Rs 15-40 lakh range. The plan is to construct about 40,000 housing units in the mid-income category. An official from DLF Homes said that the company will now be focusing on developing houses, which are affordable for middle and upper middle class. “The major factors that have affected the realty business include the economic slowdown as well as an over supply of housing options in the top-end category of the market. So the lower segments which remained untapped are now being focused upon,” says the official.
He further adds, “Developers are willing to squeeze their margins and will be developing affordable housing units by reducing the size and specifications and offering one or two bedroom apartments.” The investors are slowly returning to the market as the developers have reduced their project prices and are offering lucrative deals. Where on an average two bedroom apartments were priced between Rs 35-40 lakh, now the prices have come down to about Rs 15-35 lakh.
On the other hand, Omaxe Constructions plans to invest around Rs 8,000 crore over the next five years in affordable housing projects. DP Srivastava, Director, Omaxe Constructions says, “We have plans to develop over 10,000 houses in the first year with an investment of Rs 1,000 crore. Overall the apartments will be ranged between Rs 5-10 lakh and Rs 10-20 lakh categories. In the present scenario about 90% people can afford a home in the price range of Rs 5-15 lakh.”
As the company has created a land bank of about 700 acre of licensed land, with 1,000 acre in the process of acquisition, the plan is to build affordable housing projects across the country. Srivastava further adds, “We are planning to launch five projects under the affordable housing category by March in Madhya Pradesh and Uttar Pradesh. But due to low market sentiments there has been a delay in launching these projects. Yet we are hopeful of delivering the half-finished apartments by year end.”
Small city offerings
Developers are offering lesser value additions in the apartments than before to make up for the reduced prices. RP Malhotra from Dee Ess Estates says, “The developers that used to offer fully-furnished apartments are now offering the basic model. The high-end projects are still not able to find buyers whereas the affordable houses in the range of Rs 10-20 lakh will soon see a jump in sales.”
Sandwoods Infratech, after developing two luxury housing projects in the northern region has moved on to develop studio apartments priced between Rs 6.22 and Rs 6.55 lakh. Taking care of the basic needs of the middle income group the company is offering 360 one-room apartments in Baddi, the industrial hub of Himachal Pradesh. SK Bagolia, Managing Director Sandwoods Infratech says, “We are coming up with a five-storey building — Sandwoods Heights in Baddi and the apartments have been priced keeping in mind the needs of the service class as well as the skilled class. We are also scouting for space in Shimla to launch another affordable housing project.” Apart from attractive offers for prospective home-owners, the company has launched a scheme for investors looking for opportunities in Himachal Pradesh. Here, Sandwoods Infratech will rent out apartments and offer guaranteed monthly returns to investors. In the down payment plan, the investor has to make an upfront investment of Rs 6,00,000 to purchase the apartment. The company will then guarantee payment of Rs 3,000 per month in return to the investor starting immediately after booking for a lock on period of five years. In the construction linked payment plan, the investor can pay just 15% of the price upfront, with bank loans available for the remaining amount. Here, the company will pay the EMI to the bank till the completion of construction (approximately two years) and then guaranteed monthly returns of Rs 3,000 per month for a lock in period of further three years.
Another player — Taneja Developers & Infrastructure is investing close to Rs 500 crore on reasonably-priced housing projects in Punjab. Coming up in Mohali, TDI City is offering two bedroom apartments at Rs 14 lakh and 17.5 lakh. “We have got 500 units booked out of the total 700 offered. Phase II of this project has also been launched over 200 acre of land which will be developed into an integrated township. Other housing projects are coming up in Jalandhar, Panipat, Sonepat and Kundli,” shared Amit Batra, Regional Head, TDI.
Considering the fact that people are now preferring to buy a house rather than staying in rented apartments, the developers are offering flats ranging between Rs 12 lakh to Rs 20 lakh. Sanjeev Narang from Raglan Infrastructure says, “We are offering two Bedroom flats at Rs 12.71 lakh, three bedroom at Rs 15.61 lakh and four bedroom at Rs 20.51 lakh in Gulmohar City project at Derabassi. About 325 bookings have been made out of 450 flats offered. Even though sales have slowed down now but we will hand over the possession in November this year.”
On the contrary, the recession seems to have increased the demand in Baddi industrial belt. And the developers are planning to convert their projects into low-cost housing projects. SK Bajaj from Shakun Infrastructure, Baddi says, “Developers here have submitted plans to change over to affordable housing. Surprisingly, in the last 2-3 months the demand has picked up and one and two bedroom apartments are selling like hot cakes. We had offered 40 one-room sets and all units were sold within a month. One room apartments range between Rs 6-6.5 lakh and two bedroom flats between Rs 7.5-8 lakh.”
The global economic slowdown has hit the realty sector hard. But by offering affordable housing to the customers the developers are confident of sailing through these turbulent times.
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