Housing Demand Remains Robust, but Affordable Segment Faces Challenges
In Mumbai, where 50% of the cost of a flat in redevelopment properties goes to the government, the affordable housing segment is under significant pressure. Despite strong overall demand, developers like Niranjan Hiranandani highlight the challenges in ma
Affordable HousingReal EstateMumbaiRedevelopmentGovernment FeesReal Estate MumbaiMar 01, 2025
However, the affordable housing segment is facing significant challenges, particularly in the redevelopment projects.
According to Niranjan Hiranandani, a prominent developer, 50% of the cost of a flat in redevelopment properties is absorbed by government fees and taxes, making it difficult to keep prices within the reach of the average buyer.
This situation is not unique to Mumbai; it reflects a broader trend in urban areas across India where the cost of land and regulatory compliance is high.
The government, recognizing the need for affordable housing, has introduced several initiatives and subsidies, but the gap between policy and implementation remains a hurdle.
Hiranandani, who is known for his contributions to the real estate industry, emphasizes that while the demand for affordable housing is robust, the current regulatory framework and high costs are discouraging developers from focusing on this segment.
He suggests that a more flexible approach to land acquisition and a reduction in government levies could help alleviate the pressure on affordable housing projects.
The issue is further compounded by the rising costs of construction materials and labor, which have increased significantly in recent years.
These factors, combined with the economic slowdown caused by the pandemic, have made it even more challenging for developers to maintain affordability without compromising on quality.
In response, some developers are exploring innovative solutions such as modular construction and the use of eco-friendly materials to reduce costs.
Additionally, there is a growing trend of public-private partnerships (PPPs) in the affordable housing sector, where the government provides land and other resources, while private developers handle the construction and management.
Despite these challenges, there are success stories.
For example, the Pradhan Mantri Awas Yojana (PMAY) has made significant strides in providing affordable housing to low-income groups.
The Scheme has been instrumental in constructing millions of homes across the country, albeit with varying degrees of success in different regions.
To sustain the momentum, it is crucial for policymakers to engage more closely with developers and other stakeholders to identify and address the bottlenecks.
This includes streamlining the approval process, providing more incentives, and ensuring that the benefits of government schemes reach the intended beneficiaries without delay.
In conclusion, while the demand for housing in Mumbai and other urban areas remains strong, the affordable segment is under significant pressure.
Addressing the regulatory and financial challenges is essential to ensure that housing remains accessible to all segments of society.
Frequently Asked Questions
What percentage of the cost of a flat in redevelopment properties goes to the government in Mumbai?
In Mumbai, 50% of the cost of a flat in redevelopment properties goes to the government in the form of fees and taxes.
What are some challenges faced by developers in the affordable housing segment?
Developers face challenges such as high government fees, rising construction costs, and regulatory hurdles, which make it difficult to keep prices within the reach of the average buyer.
What are some innovative solutions being explored to reduce costs in affordable housing?
Some innovative solutions include modular construction, the use of eco-friendly materials, and public-private partnerships (PPPs) where the government provides land and resources.
How has the Pradhan Mantri Awas Yojana (PMAY) contributed to affordable housing?
The PMAY has been instrumental in constructing millions of homes for low-income groups across the country, although the success varies in different regions.
What steps can policymakers take to support the affordable housing segment?
Policymakers can support the affordable housing segment by streamlining the approval process, providing more incentives, and ensuring that the benefits of government schemes reach the intended beneficiaries without delay.
Related News Articles
Foreign Investment in Indian Real Estate: Bengaluru Emerges as a Hotspot
Despite a 6% decline in private equity investments in Indian real estate, Bengaluru witnessed a significant surge, with warehousing emerging as a dominant force.
Nielsen Media Expands Footprint in Mumbai with 1.52 Lakh Sq Ft Office Space Lease
Nielsen India Media Pvt Ltd and its subsidiary company, Whats On India Media Pvt Ltd, have leased out a massive 1.52 lakh sq ft office space in Goregaon East, Mumbai, for a whopping ₹3.87 crore monthly rent.
Streamlining Capital Gains Tax Regime: A Necessity for Economic Growth
Experts call for simplification of capital gains tax structure, uniform holding periods, and tax relief for stocks and real estate.
Independence Realty Trust Shines in Q2 2024 with Positive Earnings
Independence Realty Trust (IRT) has reported stellar Q2 2024 results, showcasing its strategic finesse in navigating the real estate market. InvestingPro provides valuable insights into the company's financial health and market position.
57% of Investors Favor Steady Rental Yield in Fractional Real Estate Ownership, Survey Finds
A recent survey has revealed that a significant 57% of investors are drawn to the steady rental yield offered by fractional real estate ownership. Additionally, 11% of participants appreciated the hassle-free property management provided by Fracspace, whi
Nilkamal Reports 30.27% Increase in Net Profit for Q2 FY25
Nilkamal registered a 30.27% increase in its net consolidated profit for the quarter ended September 30, 2024. The company's net profit after tax stood at Rs 32.62 crore, up from Rs 25.04 crore in the corresponding quarter of the previous fiscal year.