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Serious developers to enter affordable housing sector

Even though there is very little progress on creating affordable housing, the sector is likely to witness new generation of serious developers who will give priority to clear titles, transparency and delivery, industry experts believe.

“Despite various initiatives taken by the government, the affordable housing sector has not gained momentum which is required to fulfil Modi government’s ambitious programme of ‘housing for all’ by 2022. However, we will see some kind of activity in the sector going forward with a new generation of developers entering the space,” Paranjape Schemes Chairman Shrikant Paranjape told PTI.

He said the scope in the affordable housing space is immense as there has been a shift in demand from big ticket size purchases by investors to end-use customers which are almost 85 per cent of the home aspirants.

Private equity player Brick Eagle Chief Executive Officer Rajesh Krishnan said the sector will see very serious developers who want to focus on delivery.

“We are seeing a shift in the type of developers who are now entering the space. These are serious players who want to focus on delivering the projects in a clean and transparent manner. These are the ones who will adopt new technology for executing projects in a more professional way and on time,” he said.

Krishnan, however, said these players were not entering the market due to lack of funding options.

“There is rising interest from few private equity players to support developers who are taking up affordable housing projects as this space is going to the big thing going forward, mainly due to the initiatives taken by the government to promote housing for all.

“Brick Eagle’s strategy is to partner with such small developers who want to create mass housing stock. We not only provide funds but also market their projects as creating a brand for these small developers is a challenge,” 

PwC Executive Director Shashank Jain noted that though funding would be a challenge in the affordable housing segment for few more quarters till there is clarity on certain policy issues, structured debt and equity will be available for those entering this space.

“Residential segment is one which will witness a boom in the years to come as against the retail and commercial sectors. Apart from a few established players, we will see a number of new entrants in the affordable housing segment as they will have accessibility to funds.

“Moreover, these developers will be the ones who would not like to take risks of obtaining clearances, which results in cost escalation and delay in execution. They would instead look at joint development agreements where the risk is low and requires less capital,” Jain added.