Since the Prime Minister’s announcement of the Housing for All by 2022 initiative, affordable housing seems to have become the buzzword of the real estate industry. Additionally, with the rapid growth of commercial metropolitans and the shortage of real estate, low-cost, affordable housing has not just become a necessity, but a high potential industry in the current economy. Not surprisingly, development policies and tax reforms over the last few years have revolved around providing impetus to the growth and development of housing in the affordable sector, and to make this evolution of affordable urban housing in India completely seamless.
Be that as it may, it is important to note that India has an ever-growing middle-class population that consistently aspires to upgrade its way of life. According to global advisory, broking, and solutions company Willis Towers Watson, salaries in India are expected to witness a 10 per cent hike this year, a reflection of augmented organisational maturity, with employee performance being at its fore.
In fact, this rate of projected income growth is currently the highest among all countries in the Asia Pacific region. With additional disposable income in hand, and a rising number of constantly growing families who consistently aim for an improved standard of living, the urban middle class is likely to amplify its demand for homes in the premium, luxury market as well. Furthermore, it is crucial to note that not all cities or locations are conducive to the development of affordable homes, and therefore, a robust luxury market is essential for the development of those geographies.
Given the vast economic disparity prevalent in the country, as well as builders’ focus on delivering ongoing housing projects ranging between Rs 30-80 lakh within the assured timeline, it is fair to assume that the market for affordable homes is several times larger than that of luxury homes in the present scenario.
It is also likely that over the next few years, this market has the potential to grow at a much higher pace than the luxury segment, and therefore, the scope and opportunities for growth may tend to be more probable in the affordable segment. However, it is hard to make a case for the mere survival of the luxury market being in question, as a result of the growth of the affordable segment. In a country of over 1.2 billion denizens, with nearly 30 per cent occupying urban areas, the need for a luxury market is essential, and in a number of ways, inevitable.
In a nutshell, while the demand for affordable homes is likely to grow more rapidly, and could potentially outstrip supply in the near future, given ongoing developments and initiatives around affordable housing, the luxury market is speculated to grow, albeit at a slightly lower pace. Especially in urban areas, where even the upper-middle class is giving increasing impetus to the quality of life due to a rise in purchasing power, one can expect luxury supply to taper, and demand to hold firm.
About the Author:
Farshid Cooper is Managing Director at Spenta Corporation.