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Alpha International City Karnal
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The Indian real estate sector plays a significant role in the country's economy as this sector is second only to agriculture in terms of employment generation and also contributes heavily towards the Gross Domestic Product (GDP). The housing sector contributes almost 5% of the country's GDP.
Affordable Housing in India has become the new Mantra for everyone related to the realty sector in the country. From buyers to sellers and realtors to investors, everyone is pitching for affordable quality homes in India.
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The new age real estate developer has envisioned a dream – a dream of housing every family in the country. ‘Affordable housing’ is a term that possesses the potential to transform this dream, also harboured by millions of households, into reality. In fact, the main reason for increase in absorption of new launched products is the drop in per sq. ft. rate and the reduction in the size of units, which brought their prices within the affordable range of many more buyers. Most of these units were launched at a price almost 40% lower than the average pricing of apartments that were available in the first quarter of 2008. The average unit size of these apartments was also lower by almost 35%. The cost effectiveness or affordability factor contributes to the ever-increasing attraction of suburban areas.
Huge segments of untapped space, especially in tier-2 and 3 cities and towns with large scope and potential for expansion will ensure a steady trend. The trend of expanding Megapolises will be stronger in 2010 and give far more flexibility in designing townships, commercial complexes and city centres.
These encouraging trends are indicative that the markets are poised for recovery if proactive measures are adopted by the real estate community to offer the right product at the right price to the consumers. There is a need to develop innovative ways to reduce construction costs without compromising on the quality of construction apart from harnessing new methods in the use of newer, energy efficient, environment friendly materials and innovative construction technologies that minimize skilled inputs and deliver faster results at affordable prices. Paving the way for such trimming in construction cost is the use of ‘pre-fabricated materials’, or ‘systems technology’. The use of these practices can bring down construction time by as much as 50%, reduce costs by 10%-15% and also avoid employment of a large and skilled work force. At the same time, these practices help in delivering a quality end product.
The government should consider tax sops, including cuts in duties and levies for the real estate sector in a bid to promote affordable housing in the country besides actively encouraging the adoption of appropriate technologies and suitable building materials to enable construction of safe, durable, comfortable and sustainable dwellings and commercial areas.
The recent slowdown in the economy resulted in buyers constituting more 'end-users' segment than investors and speculators. Since the new class of buyers are more aware of legal documentation, approvals and due diligence, we have seen the advent of professionalism and accountability in the industry. As a result, the real estate sector in India has at last become more professional and customer-centric.
In the coming years, Indian real estate sector will witness a high growth path again. This is due to the following factors:
• Government initiatives and reforms for realty sector
• Growing Indian economy
• Growth of IT/ITES segments
• Facilitation of foreign direct investments in real estate sector
• Corrected market rate valuations
• Growing urbanization. Rapid expansion in Tier-I, Tier-II and Tier-III cities and the emergence of Megapolises and of integrated townships projects as a consequence
• Forthcoming SEZ projects and other industrial establishments
• Drop in home loan interest rates
• Increasing income levels of rapidly rising middle class + approximately 2 million graduates are produced every year in India, and that in turn creates a demand for real estate, especially in the affordable housing segment
• Expansion of organized retail and growth of mall culture
• Emergence of 'Green Buildings' concept
In particular, projected growth of the IT sector @ 14% per annum and the growth of urbanization @ 2-2.5% per annum are the 2 key factors that will generate additional demand. This is apart from the existing shortage of 24.7 million houses and related infrastructure in the country. Better infrastructure, enhanced job opportunities and an accountable and responsible real estate industry would bring sustainable growth to the business.
