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PropEquity, a real estate data analytics company, linked the decline in new supply to a significant increase in land and construction expenses, rendering the development of affordable housing projects less profitable or unsustainable.
The supply of affordable housing, priced up to ₹60 lakh each, decreased by 38% across eight major cities to 33,420 units during January-March this year, as reported by PropEquity. This decline is attributed to the sharp rise in land and construction costs, making the development of affordable housing projects less profitable.
PropEquity data shows a significant drop in new supply in this price category in 2023 compared to the previous year, with the trend continuing into 2024. Samir Jasuja, CEO and MD of PropEquity, highlighted the factors contributing to this decline, including rising real estate prices and increasing construction costs
Additionally, the post-pandemic demand for larger homes is leading developers to focus more on mid-range and luxury segments. Nitin Gupta, Secretary of CREDAI NCR, emphasized the importance of prioritizing affordable housing to ensure homeownership is attainable for lower and middle-income individuals.
"Regrettably, major NCR cities like Noida, Gurgaon, and Delhi currently face a shortage of these affordable homes," he stated.
However, Gupta mentioned that developers in numerous tier II and III cities, such as Bhiwadi, are initiating affordable housing projects.
PropEquity data reveals a decrease in the supply of homes priced up to ₹60 lakh in MMR, dropping to 15,202 units during January-March from 22,642 units in the previous year.
In Pune, the supply plummeted to 6,836 units from 12,538 units. Ahmedabad witnessed a decrease to 5,504 units from 5,971 units.
The supply in Hyderabad declined to 2,116 units from 2,319 units, while Chennai saw a decrease to 501 units from 3,862 units. In Bengaluru, the new supply dwindled to 657 units from 3,701 units, while Kolkata saw a decrease to 2,204 units from 2,747 units.
However, there was an increase in the new supply of homes up to ₹60 lakh in Delhi-NCR, rising to 400 units in January-March this year from 38 units in the previous year.
Jasuja emphasized the necessity of redefining affordable housing criteria, suggesting that properties priced up to ₹60 lakh and/or units with a 60 square meter area should be classified as affordable.
PE Analytics Ltd, a listed entity on the stock exchange and operator of the PropEquity platform, reported a 37% rise in total income to ₹44.17 crore last fiscal year from ₹32.3 crore in 2022-23.
PropEquity serves as an online provider of analytics, data, and deal flows within the Indian real estate sector. The company monitors over 173,000 projects from 57,500 developers across 44 cities in India in real-time. Its search platform generates analyses for all sectors including residential, commercial, and retail.
Source: cnbctv18
