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« India’s Leading Design Firm BMA Bags Coveted CNBC Award | Home | Fear Factor Affects Real Estate in Metros »

Oppertunity in Housing Sector

Though at a nascent stage still, ‘affordable housing’ in India holds great potential and could redefine the contours of Indian real estate.The private sector and the government have to work in tandem to provide housing for the middle and lower middle classes.The classic response to a ‘demand slowdown’ is to cut prices in the short term, lower profits, and encourage demand to retain the market share. But if there is no scope for price reduction, another strategy would be to identify the market segment which holds potential. For the real estate sector that is ‘affordable housing’. The shake-up experienced by the sector has compelled developers to redefine their product portfolio. But the activity on the ground is limited largely due to apprehensions of low profit margins.

Realtors should realign their strategies across all segments, primarily the residential segment, which poses the greatest challenge. Home buyers with a budget of Rs 30-40 lakh have deferred their plans to buy new houses due to concerns about the economic scenario. To regain the customer attention and meet their requirements developers should offer the right products at the right price and time. Particularly, the support measures by the RBI is a good initiative that would support demand growth in the housing sector. Bringing under priority sector the lending to Housing Finance Institutions to support home loans of up to Rs 20 lakh would help the growth of affordable housing, encourage banks to increase lending to the housing sector and bring down interest rates. Banks now have a safe option to meet their priority sector targets. Housing is a basic need and any restrictions on lending to this sector will have to be done away. The support to refinance through the National Housing Bank is a welcome move, Mr Murali said. Developers should appreciate the shortage and demand for housing in India, which will exist for at least the next 10 years, and deliver the products which meet the demand at a realistic price.

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