COVID-19 led to a remarkable change in all of our professional and personal choices made. Lifestyle being one of the most prominent aspect in it. This transition is directly translated into the demand shift witnessed in the type of housing units available and their location.
Affordable housing emerged as the most preferred segment among end-users in Tier II-III cities. Reverse migration and remote working being the major influencing factors for driving this trend.
A report by ANAROCK states that housing demand is likely to increase in smaller cities beginning with rental arrangement first. Cities including Lucknow, Indore, Chandigarh, Kochi, Coimbatore, Jaipur and Ahmedabad would be the main beneficiaries. A major share of Indian residential market is in the metros which accounts to 70%, while the remaining 30% is scattered in smaller towns. This will change drastically as the scarcity of well-planned projects in smaller cities remain. The need to have a cleaner and well-maintained lifestyle is reinstated with pandemic.
Builders involved in developing affordable units tend to prefer the high-rise structures due to the cost efficiency, which is opposite to the demand observed in smaller cities during pre-COVID times. Low-rise apartments, independent plots were more in demand for Tier II-III cities. However, as per the current market dynamic buyer sentiment is changing. The residents here want to invest in real estate only when the deal promises multiple benefits.
A similar living experience that exists in metro cities with amenities like club houses, gyms, gaming courts, pool, jogging tracks, shopping arcade etc. Also, peripheral regions in such cities are becoming the most ideal locations for new projects, due to the cost of land, resources available, improving state of infrastructure etc.
Elaborating on the efforts by government in terms of infrastructure improvement and policy reforms that boost the growth of affordable housing for Tier II-III cities, Raman Gupta, Director- Branding and Construction, GBP Group said, "Under the Credit-Linked Subsidy Scheme (CLSS), housing for EWS/LIG/MIG beneficiaries is being sanctioned by the HFCs under the Pradhan Mantri Awas Yojana. The scheme is launched to cater the demand of housing shortage of 1.2 crores (approx.) and fulfil government vision of 'Housing for All' by 2022. While the benefits of this scheme post the turmoil of pandemic will undergo some time extension but the public-private efforts combined would not let this be an unfinished developmental campaign."
In order to mitigate the effects of pandemic the latest update of Rs 10,284 cr being sanctioned under SWAMIH AIF which will aid completion of 71,559 homes across 101 projects rings positivity for the developers with approved projects in this scheme.
It will be extremely helpful to clear stuck projects. Kushagr Ansal, Director, Ansal Housing, President CREDAI Haryana whose one of the projects in Gurgaon received final approvals for the fund said, " The plan was to have a Rs 25,000-crore fund, with contribution of both the government and other investors set up in 2019, but disbursement of same has been fragmented and gradual. The 101 stuck housing projects are spread across a broad mix of markets, including metros and also Tier- 2 locations like Karnal, Panipat, Lucknow, Jaipur, Nashik, Vizag ,Surat, Dehradun, Kota, Nagpur, and Chandigarh. The share of Tier II markets receiving early sanction of funds by government indicates the impact, sale of affordable housing projects from smaller cities can have on the overall real estate sector and economy."
As per a Proptiger report, 56% of all homes that were registered as sold properties in the October-December 2019 period were priced within the Rs 45-lakh bracket. Also, 52% of new project launches during these three-months period were in the affordable segment. Pradeep Aggarwal, Founder & Chairman - Signature Global Group & Chairman - ASSOCHAM National Council on Real Estate, Housing and Urban Development adding on to the growing popularity and acceptance of affordable homes in Tier II-III cities said, "We are positive about the buyer sentiment and trust in these affordable units. During the lockdown times the response received on our online site visits and social media handlers reflected that affordable housing in these markets is driven by both end-users and investors. The buyers in the new normal can think about buying these properties and not just renting it due to its affordable price point coupled with subsidies provided, and the variety of amenities offered."