Mumbai being India’s most expensive real estate market, has long encountered a dearth of affordable homes. Market trends including population growth, urbanization and the reluctance of real estate developers to cater to this target sector have been the long-term drivers of this trend. Now, with incentives from both the public and private sector increasing the affordability of homeownership, demand from this sector of the market is set to increase by a further 25% coming exclusively from Mumbai Metro Region.
A significant driver of this increased demand is the government’s Pradhan Mantri Awas Yojana (PMAY) scheme, which provides a credit linked subsidy of Rs. 2.43 lacs to home buyers purchasing residences below 60 sq. meters. This scheme has significantly reduced the costs of buying a house and expanded the possibilities of homeownership to a greater number of individuals and families.
The impact of this policy is set to be compounded by the recent slashing of interest rates by banks. Many PSU and Private sector banks have reduced benchmark lending rates from 9.1% to 8.6% in response to the recent cash inflow from demonetization. In conjunction with favorable demographics and rising disposable incomes, a rise in affordable housing demand is predicted to rise steeply.
The tenacious challenge now is to create enough stock to supply this increased demand in affordable housing. As India’s current affordable housing leader, Xrbia has long recognized the potential demand in this sector. Since then, they have heightened their focus on affordable housing sector. Having already sold 6,776 houses in the last 3 months, they are now marching up the scale of their operations with a focus on the Mumbai region. In the next quarter, 3 new projects are set to be launched in Ghatkopar, Kandivli and Thane, the latter of which will be an extensive project covering 60 acres of land.
For a market segment that has been neglected for a very long time, this comes as a welcome news. The Pradhan Mantri Awas Yojana (PMAY) scheme represents a tangible commitment from the government to its mission in achieving “Housing for All by 2020”, and is also sending positive signals to the real estate market that the demand for affordable housing is simply too great to ignore.