Affordable homes: A concept here to stay

Bangalore The 2008 recession created a new segment in the real estate industry – affordable homes. Through the years of the IT-driven property boom, especially from the early 2000s, a home meant stretching resources to the maximum. With sky-rocketing prices, many were left out of the race as they could not afford the steep prices. Buying in the outskirts was not considered feasible as the connectivity was inadequate. It did not look like the steep demand for property and the IT boom that pushed the property market would change things either. Then came the recession at the end of 2008. The slump in the IT sector and job uncertainty all around impacted the real estate sector, just as it did many others too. The property market, significantly driven by the IT sector, went through a price correction. And along the way, the new segment – affordable homes – came into being. Two factors led to the creation of this new segment. The first was the emergence of a new target audience. Those from sectors not affected by the job uncertainty, such as the state sector, were a prospective target audience for developers. This segment, along with the many waiting in the wings because the rates were too high for them, formed a niche market to tap. Along with the job security came salary hikes too making a home a possible dream for many. Developers who recognised the opportunity either changed plans to cater to the demand or launched new affordable home projects. Essentially, an affordable home came to be defined as a flat around 1,000 sqft costing between Rs 30-45 lakhs. While the concept of affordable homes was gaining ground, the connectivity to the outskirts too improved vastly with projects such as the six-lane Bellary Road being completed and many localities once considered distant coming closer to the city centre in terms of commuting time. The relatively lower land cost in the outskirts made it even easier to plan affordable home projects here given the fact that land contributes most to the cost of a project. It was not long before affordable home projects sprang up all around the city, most offering all modern and basic amenities too. With realty proving to be a lucrative investment over time, these homes were good value buys. They promise good returns over time as the city expands. Now, as the market bounces back and more buyers across the spectrum pick up residential properties, this segment continues to remain a good market to tap. The lower interest rates and tax breaks on home loans have brought more buyers into the market. The extension of the one percent interest subvention scheme of the government on home loans up to Rs 10 lakhs where the cost of the house is not more than Rs 20 lakhs is another benchmark for the realty sector. Here too, the demand from this segment was largely untapped. As the city expands and more commercial belts come into being, the demand for housing increases. Bangalore has space and potential on all sides to expand and host commercial hubs. The IT sector for one will look at expansions around the city as the old IT belts exhaust space. The manufacturing sector too will change the skyline as industrial belts developed by the state government agencies fuel commercial development. The affordable home segment will draw buyers from every industrial sector, be it IT or manufacturing. These projects also come in handy for companies looking at transit flats for their junior and middle level staff. Buying an affordable home project in the outskirts holds potential for capital appreciations. As an investment, as the city expands, such projects that find themselves in developed localities at a later point in time, will fetch high returns. Filed under: Bangalore , Builders/ Developers , New projects Tagged: Affordable Homes , Bangalore

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Affordable homes: A concept here to stay

Tagged as: affordable homes, builders/ developers, city, connectivity, homes, market, new-projects, outskirts, real estate, state, the-outskirts