Godrej Properties on Thursday announced their decision to build about 500 housing units in this format at the Godrej Garden City project, where the firm has been developing two and three BHK apartments that are currently priced over Rs 35 lakh and Rs 80 lakh respectively. Godrej will be offering a 600 square feet apartment at prices starting from Rs 16.5 lakh, a company official said.
One the top revenue earners for Godrej Properties, the Godrej Garden City project contributed revenues to the tune of Rs 49.1 crore in the third quarter of the current financial year. This is a substantial 40 per cent drop in revenues when compared to Rs 82.3 crore it earned from the project during the same period last year.
The decision to come up with 1 BHK housing units is seen as a move to bolster revenues in a market that has been stagnating since the last one year or so, say real estate experts.
Jones Lang LaSalle (JLL), a global property consultant observes in its report on Affordable Housing, During the demand slowdown in 20082009, residential developers realised that they had concentrated development portfolios in upper-mid- and luxury segments, where the market has become very competitive in the last decade due to the entry of new players. Affordable housing segment provides an appropriate option to diversify their risks.
However, we are yet to see a phase seen around 2008-09 when a large number of developers had suddenly taken up affordable housing, says Neeraj Tomar, head of Ahmedabad operations of JLL.
Now that the supply in two and three BHK segments is more than the demand, we see developers moving on to the 1 BHK segment where the demand is high.
Similar has been the case with Adani Township & Real Estate which is building a premium development in the city. The firm recently floated a new affordable housing project to tap the demand in this segment, that would release about 800 units of 1BHK and 2BHK houses that are priced between Rs 16-22 lakh.
As per Central government figures, the urban housing shortage is estimated to be over 18 million for the next five year plan from 2012-17, of which 96 per cent are in economically weaker section (EWS) and low income group (LIG) categories.
Experts also feel that the recent move of the Reserve Bank of India to allow external commercial borrowings up to $1 billion for low-cost affordable housing projects and the plan to allow more FDI in this segment would give a further boost.
Another player in the segment, Tata Housing is already in the process of developing 1,800 units in Ahmedabad, jointly with Arvind Real Estate, is seeing decent demand. We have been able to sell houses in the second phase at a decent pace. We are now planning a third phase as well, said Kamal Singal, CEO, Arvind Real Estate, the realty arm of textile major Arvind Ltd.
Tata Housing signed a memorandum of understanding with the Gujarat government worth Rs 3,500 crore to develop affordable homes in Ahmedabad at the recently held Vibrant Gujarat Global Investors Summit 2013 held in January .
This edition of the summit attracted about Rs 1.34 lakh crore investments to the sector where firms from United States, Finland, United Kingdom and others had promised investments to bring in technology and provide technical support to build affordable houses in Gujarat.
These initiatives by private developers comes at a time when the state government has promised to build 50 lakh affordable homes across the state within five years.
To provide the necessary impetus, the Ahmedabad Urban Development Authority in its recent city development plan has earmarked a 76 square kilometre area as a special affordable housing zone.