After witnessing sluggish demand in construction and sales in 2015, the affordable housing segment is set to witness a boom this year in Bengaluru. The recent budget announcement on providing an additional deduction of Rs 50,000 on interest repayment for home loans up to Rs 35 lakh has come as a big driver of demand in the affordable housing segment.

Houses with a carpet area of 60 metres with a price tag of up to Rs 55 lakh, comes under this segment, according to industry sources. Cities like Bengaluru, Pune and Chennai are emerging as most sought after places for affordable housing projects as it is very difficult to buy a house under Rs 55 lakh in major metros like Mumbai and Delhi-NCR.
“Houses priced under R60 lakh are seeing good traction in Bengaluru this year and the industry expects sales of affordable houses accounting for at least 20% of the overall sales in 2016,” Om Ahuja, CEO-Residential, Brigade Enterprises said.

It is estimated that Bengaluru will witness sales of around 70,000 housing units in 2016, of which affordable housing segment would account for at least 20%, he said. This means a growth of 11.11% over 2015. Last year, Bengaluru witnessed sales of 63,000 units while it was 68,000 units in 2014.

“The budget proposal of giving some tax incentives to builders and developers for houses with up to 60 sq metres of carpet area has come as big booster dose. We can expect a larger number of housing projects in this category in the next three years across various cities,” Ahuja said.

According to QuikrHomes, the real estate wing of classifieds portal Quikr, Bengaluru saw a decline in the number of new launches in the affordable segment in 2015 as against 2014. There were only 181 projects (32,700 units) in 2015 as against 271 projects (53,300 units).

“The scene is changing in 2016 and so far 30 projects have been launched with approximately 17,500 new units. Of this, affordable housing units are estimated at 9,500 units, which is 54% of all new houses under offer”, Manish Sinha, head of QuikrHomes said.

Affordable housing projects are located in regions such as Anekal, Attibele, Hosa Road, Begur, Bidadi, Kammasandra, Kengeri, Kanakapura Road, Devanahalli, Dommasandra, Chandapura, Hoskote and Rajanukunte. Developers who are investing in this segment include VBHC Value Homes, Provident Housing, Dreamz Infra, Mahaveer Reddy and Sipani Properties, amongst others.

“Given the demand for affordable housing and the thrust received from the Union Budget, as well as the infrastructure development in the offing in far flung areas of Bengaluru, affordable housing can be considered to be a viable option”, Satish B N, executive director-South, Knight Frank India, a property consultancy firm, said.

The Confederation of Real Estate Developers’ Association of India (CREDAI) expects the percentage of affordable housing projects to double in the next three years in the overall sales from the present 15%.

“The definition of affordable housing has now changed with land prices going up manifold. There is nothing available under R30 lakh in Bengaluru. Houses under R50 lakh are most sought after in Bengaluru. We expect the share of such houses in the total sales to touch 30% in the next three years,” Suresh Hari, Secretary, CREDAI said.