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: Tata Housing’s current portfolio in the affordable housing segment is more than 20 million ft2 in various stages of construction spread across various cities in India. Mumbai-based Shivom Group has dedicated close to 9 lakh ft2 on their affordable housing projects. Raheja group plans to launch 3 million ft2 of projects in the same category in the next three-four months time. DLF also plans to build one lakh affordable houses costing less than Rs 20 lakh in major cities across the country. Such a flurry of activity surely should boost the sagging spirits in the realty sector. But there are some who suggest that this growing interest in the affordable housing has made the segment overcrowded. This rapid increase in supply is outstripping absorption, leading to an inventory pile-up.

Crowded market?

A recent report by real estate research firm, PropEquity, points out that many developers jumped on the “Affordable Housing” bandwagon to bail themselves out of the global economic crisis. This saw the launch of a slew of projects in this segment. “The initial euphoria in the affordable housing resulted in this category witnessing a very healthy absorption. However, in Q3 of calendar year 2009 it can be seen that the velocity of absorption is on a decline, leading to an inventory pile-up,” says Samir Jasuja, Founder and CEO, PropEquity.

According to the data stated in the report spanning from July 2008 to September 2009, the segment under Rs 15-30 lakh category witnessed the maximum number of sales, with the 2 BHK modules being the most sought after. Jasuja adds that developers are now resorting to the rate revision strategy and have begun increasing the prices riding on the expectation of continued healthy absorption. “As a result, the affordable segment being highly price sensitive, has registered a decline in the sales velocity. Developers in the current situation are focusing more on marketing rather than actual on-ground execution of projects,” he adds.

However, many disagree. “Oversupply is true of certain micro markets only. In the larger scheme of things, the demand for affordable housing is touching 25 million, while the supply is only on the lines of a few million units as of now,” suggests

GP Savlani, Resident Director, Confederation of Real Estate Developers’ Associations of India.