The New Realty

Why Top-notch Real Estate Companies Are Entering the Affordable Housing Market

- Chanchal Pal Chauhan

A GALAXY OF TOP-NOTCH REAL ESTATE developers has lately descended with a bang on the affordable housing segment. Most have launched separate brands to differentiate their foray – thus Tata Housing Development Company has Tata Value Homes, Shapoorji Pallonji Group has Joyville, Mahindra Lifespace has started Happinest. Even lesser known ones like Puravankara and Mumbai’s Sunteck Realty have taken similar steps, with the former setting a wholly-owned subsidiary, Provident Housing. “There has been a perceptible shift towards affordable housing with organised players increasingly venturing into this space,” says A.S. Sivaramakrishnan, Head, Residential Services – India, at real estate services giant CBRE South Asia.

Until now, most of these companies operated in the premium and luxury residential segment, building and selling houses and apartments priced between ₹50 lakh and ₹10 crore, depending on the city where the projects were based. Under their new brands, they will mostly be selling one or two bedroom-hall-kitchen (BHK) flats, costing ₹15 lakh to ₹35 lakh, located largely in Tier-II cities or on the periphery of metros. (Such prices are not viable within metros with even one and two BHK flats in Mumbai, for instance, selling for no less than ₹50-70 lakh.)

Under its Joyville brand, Shapoorji Pallonji will construct 20,000 houses in the next seven years, investing ₹5,500 crore. “There is a sea change in the market,” says Venkatesh Gopalkrishnan, CEO, Shapoorji Pallonji Real Estate, who is also in-charge of Joyville. “There is absolute saturation in the niche upper segment, but much opportunity in middle-income housing. To maximise the potential of this market, we decided to set up a separate company with some other investors to take our high-value mother brand into the mid-residential space.”