Low-cost and quality: The buzzwords
The Economic Times, Realty, February 06, 2009, Page 25
Low-cost and quality housing are the buzzwords ruling the market in today's day and time. ET Realty explores how Delhi and the National Capital Region is dealing with it
Prabhakar Sinha
After a long time, real estate market has turned into a buyers' market. This has lent a great opportunity to end users to select a suitable home at affordable prices. And, taking cue from the market, developers have been forced to respond to buyers' requirements.
The buzzword in the market today is 'affordable housing' - quality homes at affordable prices. This seems the only way the sector can fight the slowdown in economy. Anshuman Magazine, MD of C B Richard Ellis (South Asia), says that while there is a huge unmet demand in the affordable segment of housing sector, the premium segment is witnessing a condition of oversupply.
The unreasonably high focus on the premium segment of housing sector by a cross-section of developers affected the construction industry - blocking capital of developers saddled with large premium projects. On the other hand, there is a huge demand for affordable housing in the price range of Rs 18 lakh to Rs 30 lakh.
Because of the slowdown in economy, prices in real estate have already fallen by around 15% in the ongoing projects. At the same time, since the slowdown has helped bring down commodities prices as well, the cost of construction has also come down in the last one year. The prices of cement and steel, which consti tute a major chunk of construction costs, have declined substantially. While steel prices have fallen by over 40%, cement prices have come down by around 20%.
Because of stiff competition, developers have passed on the benefit of fall in cost of construction to end users. Now, the developers have launched projects, from Rs 1,800 per sq ft in Ghaziabad on National Highway 58 to Rs 2,100 per sq ft on NH-24 in Crossing Republic, and Rs 2,400 per sq ft in Indirapuram in Ghaziabad, Gurgaon and Faridabad. Even in the premium areas in the National Capital Region of Noida and Gurgaon, developers are launching new projects at around Rs 2,700 per sq ft. This is only one part of the story. As authorities in Noida and Ghaziabad increased the number of units that can be constructed on a given area, developers have reduced the size of apartments. This has helped reduce the cost of apartments in, in a big way. Developers have reduced apartments' size by up to 30% to make them affordable for the middle class. The size of an average two-bed room apartment has come down from 1,500 sq ft to around 1,200 sq ft. In some cases, developers are constructing two-bedroom apartment of 1,000 sq ft. Similarly, the size of a typical three-bedroom house has come down from 2,000 sq ft to around 1,500 sq ft. This has brought a sea change in prices of apartments in the Delhi-NCR. For instance, earlier, an apartment in Noida was being sold at Rs 3,600 per sq ft to Rs 4,200 per sq ft, in the guise of a premium product. At the same time, the size of a three-bedroom apartment used to be around 2,000 sq ft. That means the cost of a three-bedroom apartment in Noida used to vary between Rs 72 lakh to Rs one crore. But now, with the change in market conditions, a new apartment in the same zone is being offered at around Rs 2,700 per sq ft. Besides, as the size of the apartment has been reduced to around 1,500 per sq ft, the average price of a three-bedroom apartment has come down to around Rs 43 lakh. Clearly, the price of that 'sweet home' has come down by almost 50% in Noida. The same is true in other parts of the town also. However, new apartments will not have the same specifications as those that developers offered in the earlier projects. The new projects may not have Italian marble and Jacuzzi, for instance, but they give value for money. They will have all the other ingredients like 24-hour power back up, top-class security system, swimming pools and other amenities.
FOCAL POINT
Developers have reduced apartments' size by up to 30%
The size of an average 2-bed room apartment has come down from 1,500 sq ft to around 1,200 sq ft. Some developers are constructing 2-bedroom apartment of 1,000 sq ft. as well
The size of a typical 3-bedroom house has come down from 2,000 sq ft to around 1,500 sq ft.
The Economic Times, Realty, February 06, 2009, Page 25
Low-cost and quality housing are the buzzwords ruling the market in today's day and time. ET Realty explores how Delhi and the National Capital Region is dealing with it
Prabhakar Sinha
After a long time, real estate market has turned into a buyers' market. This has lent a great opportunity to end users to select a suitable home at affordable prices. And, taking cue from the market, developers have been forced to respond to buyers' requirements.
The buzzword in the market today is 'affordable housing' - quality homes at affordable prices. This seems the only way the sector can fight the slowdown in economy. Anshuman Magazine, MD of C B Richard Ellis (South Asia), says that while there is a huge unmet demand in the affordable segment of housing sector, the premium segment is witnessing a condition of oversupply.
The unreasonably high focus on the premium segment of housing sector by a cross-section of developers affected the construction industry - blocking capital of developers saddled with large premium projects. On the other hand, there is a huge demand for affordable housing in the price range of Rs 18 lakh to Rs 30 lakh.
Because of the slowdown in economy, prices in real estate have already fallen by around 15% in the ongoing projects. At the same time, since the slowdown has helped bring down commodities prices as well, the cost of construction has also come down in the last one year. The prices of cement and steel, which consti tute a major chunk of construction costs, have declined substantially. While steel prices have fallen by over 40%, cement prices have come down by around 20%.
Because of stiff competition, developers have passed on the benefit of fall in cost of construction to end users. Now, the developers have launched projects, from Rs 1,800 per sq ft in Ghaziabad on National Highway 58 to Rs 2,100 per sq ft on NH-24 in Crossing Republic, and Rs 2,400 per sq ft in Indirapuram in Ghaziabad, Gurgaon and Faridabad. Even in the premium areas in the National Capital Region of Noida and Gurgaon, developers are launching new projects at around Rs 2,700 per sq ft. This is only one part of the story. As authorities in Noida and Ghaziabad increased the number of units that can be constructed on a given area, developers have reduced the size of apartments. This has helped reduce the cost of apartments in, in a big way. Developers have reduced apartments' size by up to 30% to make them affordable for the middle class. The size of an average two-bed room apartment has come down from 1,500 sq ft to around 1,200 sq ft. In some cases, developers are constructing two-bedroom apartment of 1,000 sq ft. Similarly, the size of a typical three-bedroom house has come down from 2,000 sq ft to around 1,500 sq ft. This has brought a sea change in prices of apartments in the Delhi-NCR. For instance, earlier, an apartment in Noida was being sold at Rs 3,600 per sq ft to Rs 4,200 per sq ft, in the guise of a premium product. At the same time, the size of a three-bedroom apartment used to be around 2,000 sq ft. That means the cost of a three-bedroom apartment in Noida used to vary between Rs 72 lakh to Rs one crore. But now, with the change in market conditions, a new apartment in the same zone is being offered at around Rs 2,700 per sq ft. Besides, as the size of the apartment has been reduced to around 1,500 per sq ft, the average price of a three-bedroom apartment has come down to around Rs 43 lakh. Clearly, the price of that 'sweet home' has come down by almost 50% in Noida. The same is true in other parts of the town also. However, new apartments will not have the same specifications as those that developers offered in the earlier projects. The new projects may not have Italian marble and Jacuzzi, for instance, but they give value for money. They will have all the other ingredients like 24-hour power back up, top-class security system, swimming pools and other amenities.
FOCAL POINT
Developers have reduced apartments' size by up to 30%
The size of an average 2-bed room apartment has come down from 1,500 sq ft to around 1,200 sq ft. Some developers are constructing 2-bedroom apartment of 1,000 sq ft. as well
The size of a typical 3-bedroom house has come down from 2,000 sq ft to around 1,500 sq ft.
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