Published On: Fri, Jun 9th, 2017

Chennai Builders Focus on ‘In-Demand’ Affordable Housing Segment

The number of budget housing units launched in and around Chennai increased from 102 in the first four months of 2016 to 124 in the same period this year thanks to a central government subsidy, and property developers are gearing their attention away from upscale apartments to explore the affordable segment.

Even leading developers are floating new entities to undertake affordable housing projects as there is a surge in demand, along with the determination of the government to provide all-round support to the developers.

A study carried out by property consultant Cushman & Wakefield on the realty market in Chennai revealed that 124 mid-level units (2 BHK) and 748 premium units (3-4 BHK) were launched during the first four months of 2017, but no new projects have been announced in the luxury segment, which ranges from 3,000 to 4,000 square feet.

N Nandakumar, former president of the Tamil Nadu chapter of Confederation of Real Estate Developers Associations of India (CREDAI), said that incentives were driving homebuyers towards affordable houses. About 20% of CREDAI members, who used to focus primarily on upscale apartments, have turned their attention to budget flats because 65% of the demand is from the affordable sector.

There are instances where plans of apartments in an area of 900 to 1,000 square feet were reworked to suit the requirements of budget houses after high-end properties did not attract customers.

Budget apartments with an area of around 700 square feet in the suburbs are priced at a range between Rs20 lakh and Rs50 lakh depending on the location.

Affordable houses that meet certain parameters are eligible for benefits under the Pradhan Mantri Awas Yojana (PMAY) with prospective buyers receiving a subsidy.

The Prime Minister’s announcement earlier on 4 percent interest rate exemption up to Rs 9 lakh and 3 percent exemption up to Rs 12 lakh has convinced property developers that the government is keen to enlarge the area of fiscal sops for affordable housing. This trend has convinced more developers to enter into the affordable housing development, including leading developers to earmark a portion of their portfolio.

A number of property developers, who already own significant land in Chennai’s suburban and peripheral areas, are rethinking on development plans to earmark a portion of the land for affordable housing development.

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