Affordable housing has been the bellwether in the recovery path, and most developers forayed into this segment during the liquidity crisis given the attractive demand/supply metrics. However, we had adopted a muted stance then on the sustainability of this model, as profitability was yet to be tested due to cost escalations/delays - this seems to be turning true now.
With economy bouncing back, the demand for premium/luxury housing is up. There is an increasing bent among developers to launch higher-margin projects. DLF sold high-end apt valued at Rs10bn in Dec’09 alone; IBREL sold apts priced at Rs70m- Rs225m in ‘Sky’ proj in Mumbai; and Puravankara’s 2010 launches comprise 67% of premium housing.
Though gov’t has extended 1% interest subsidy on loans for homes
Given buyers’ price sensitivity, affordable housing will remain the way forward to tap potential housing demand in India.
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