Affordable Housing Supply Drops, Demand Remains Strong: HDFC Capital's Vipul Roongta
HDFC Capital MD & CEO Vipul Roongta addressed a FICCI real estate conference, highlighting the decline in the supply of affordable housing units while the demand remains robust. He urged developers to focus on the Rs 50 lakh to Rs 1 crore segment.
Affordable HousingReal EstateHdfc CapitalVipul RoongtaFicciReal EstateFeb 11, 2025
Roongta emphasized that while the supply of affordable housing has decreased in major cities, the demand for such units remains strong.
He urged real estate developers to focus on building homes priced between Rs 50 lakh and Rs 1 crore.
Roongta, who also serves as Co-Chairman of the FICCI Committee on Urban Development & Real Estate, noted that the recent euphoria over housing price appreciation has vanished.
'I keep reading about how demand for affordable housing is going down, and how the demand for premium has gone up.
It's actually not that the demand has gone up for premium.
It is the supply of affordable that has gone down,' he said.
The supply of housing units in the Rs 35-75 lakh price bracket has significantly decreased, leading to a decline in sales.
This decline is often misinterpreted as a drop in demand for affordable units.
Roongta cited a recent project his company launched in Gurugram, where they offered 1,000 apartments priced at Rs 40 lakh each.
They received 150 times the number of applications, all of which were paid applications, demonstrating the strong demand for affordable housing.
Roongta stressed the need to focus on building housing for the masses.
'Clearly, the euphoria related to price increases, which was prevalent about a year and a half ago, is no longer present in any micro-market, regardless of the segment or brand,' he observed.
He noted that there has been a trend of premiumization across sectors post-COVID, but this is not unique to real estate.
'The so-called premiumization is not specific to real estate.
It happened across all sectors.
It's about return on time invested and return on equity.
Developers have moved towards projects that sell easily with lower effort.
If they can premiumize and get more per square foot, why not?' Roongta explained.
With the moderation in demand and the subsiding euphoria of price increases, Roongta is hopeful that the focus will return to the affordable and mid-income segments.
'The big segment is going to be the Rs 50 lakh to Rs 1 crore range because everyone wants premiumization but at the right price.
This is going to be the order of the day from a sector perspective, financial perspective, and developer's perspective.
We are already seeing a lot of large ecosystems and developer projects getting scaled down in size, and this trend will continue,' he said.
According to PropEquity, housing sales dropped by 9% to nearly 4.71 lakh units in 2024 across nine cities Bengaluru, Chennai, Hyderabad, Kolkata, Delhi-NCR, Mumbai, Navi Mumbai, Pune, and Thane.
New supply fell by 15% to 4,11,022 units in 2024, primarily due to under-activity during the general elections and monsoon seasons.
HDFC Capital Advisors is a leading real estate investment firm in India, known for its focus on affordable and mid-income housing.
The company has been instrumental in driving sustainable and inclusive growth in the real estate sector, working closely with developers and policymakers to meet the housing needs of the masses.
Frequently Asked Questions
What is the current state of affordable housing supply in major Indian cities?
The supply of affordable housing units in major Indian cities has significantly decreased, leading to a decline in sales. This decline is often misinterpreted as a drop in demand, but the actual demand for affordable housing remains strong.
What segment of the housing market does Vipul Roongta recommend developers focus on?
Vipul Roongta urges developers to focus on building homes priced between Rs 50 lakh and Rs 1 crore, as this segment has a strong demand and is expected to be the order of the day in the coming years.
What is premiumization, and how has it affected the real estate market?
Premiumization refers to the trend of offering premium products or services, often at higher prices. In the real estate market, this trend has led developers to focus on projects that sell easily with lower effort, resulting in fewer affordable housing units.
What does PropEquity report about housing sales and new supply in 2024?
According to PropEquity, housing sales dropped by 9% to nearly 4.71 lakh units in 2024 across nine major cities in India. New supply fell by 15% to 4,11,022 units, primarily due to under-activity during the general elections and monsoon seasons.
What is the role of HDFC Capital Advisors in the real estate sector?
HDFC Capital Advisors is a leading real estate investment firm in India, known for its focus on affordable and mid-income housing. The company works closely with developers and policymakers to drive sustainable and inclusive growth in the real estate sector.
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