Affordable housing amid COVID-19
The global economy has been affected by the Coronavirus pandemic; and the realty sector too has been going through multiple challenges. It has indeed been a rough time for real estate-a time when liquidity is a problem, and project completion is becoming a challenge for developers, especially those who do not have the required financial support.
Despite all odds, the developers are witnessing a slight improvement in the number of site visits nowadays, which is a positive sign for real estate. However, some real estate categories are expected to benefit more than others. One such alternative is affordable housing.
Government schemes, such as Credit Link Subsidy Scheme (CLSS) and Pradhan Mantri Awas Yojana (PMAY), which are modelled to fulfill the vision of ‘Housing for All’ by 2022, are likely to work well for the affordable segment. Such schemes and deferred payment plans that have been implemented by quite a few developers provided the buyers and investors, an incentive to invest their funds into this type of housing. Unlike mid-segment and luxury housing groups, affordable housing projects have great chances of achieving faster ownership. One of the main influencing factors behind this sudden change of interest is that the people who were earlier living in rented accommodations have now started to realise the value of owning a home. To take full advantage of this market situation, an affordable housing player must be equipped with technology and means to meet the requirements of potential customers.
To promote affordable housing, the developers showing interest in the segment need to be promoted adequately. The figures for affordable housing projects under PMAY show an unequal distribution across the country. If we talk of 2019, Uttar Pradesh leads the number of homes constructed in 2019. The bulk work under PMAY has been done only in a selected States, including UP, Gujarat, and AP, which accounts for around 35 percent of the total houses constructed in 2019. The approved and under-construction homes under PMAY are about one crore, which leaves immense space for more houses to be approved under this scheme.
The pandemic has broken the momentum as about 40 percent of the under-construction units in top cities were in the affordable housing before the lockdown was announced. It will take the segment a few more months to get back to the speed it has earlier been going at. For affordable housing to be effective, various State governments should take a clue out of the directives issued by the Haryana government, which has fixed the cost of affordable housing at Rs 4,000 per sq ft among other decisions.
The phenomenon, i.e. the current pandemic situation, which has compelled many people to stay away from the peripheral areas of the tier I cities or to search for alternatives, is a booster for affordable housing. It will contribute to the development of jobs in these areas, along with the movement of MNCs to cut expenses. With the job market sorted out after the migration of IT and BPO firms, the market will see a steady demand for real estate, particularly for affordable housing in these areas.
Source 99 acres