Affordable Housing Demand High, Supply Low: HDFC Capital MD

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Feb 11, 2025 16:39

HDFC Capital MD Vipul Roongta says demand for affordable housing remains strong, but supply has decreased. He urges developers to focus on homes costing Rs 50 lakh to Rs 1 crore.
Affordable Housing Demand High, Supply Low: HDFC Capital MD
Photograph: Riya Mariyam R/Reuters
New Delhi, Feb 11 (PTI) HDFC Capital Advisors MD and CEO Vipul Roongta on Tuesday said the supply of affordable housing has gone down across major cities but not the demand, and urged real estate developers to focus on building homes costing Rs 50 lakh to Rs 1 crore.

Addressing a FICCI real estate conference here, Roongta also noted that the euphoria seen in the last few years about housing price appreciation has vanished.

"I keep reading about how demand for affordable 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," said Roongta, who is Co-Chairman, FICCI Committee on Urban Development & Real Estate.

He said the supply of housing units, in Rs 35-75 lakh price bracket, has abysmally gone down leading to decline in sales, which is being wrongly interpreted as that the demand of affordable units is going down.

"We just launched a project with one of our industry developers in Gurugram, and the unit price was Rs 40 lakh. Can you imagine how many applications we got for a 40 lakh privately done apartment? There were some 1,000 apartments. We got 150 times the applications, and these are paid applications, and these are not broker applications," Roongta explained.

He stressed the need to build housing for mass.

"Clearly the euphoria, which was there say maybe a year, year and a half back, related to increase in prices is no longer than any of the micro markets, irrespective of segment, irrespective of brand," Roongta observed.

He said there has been premiumisation post-COVID pandemic across sectors.

"The so called premiumisation is not related to real estate. It happened across all sectors. Obviously, it's return on time invested and return on equity. So the development community has also moved towards something which sells easily and lower effort. So if I can premiumize and get more per square foot. Why not?," he said.

With moderation in demand and price rise euphoria subsiding, Roongta hoped that focus will come back on affordable and mid-income segmment.

"The big segment is going to be the Rs 50 lakh to Rs 1 crore, because everybody wants premiumized but at the right price. And that, I think, from a sector perspective, and from a finances perspective and from a developer's perspective, is going to be the order of the day. We are already seeing a lot of these large ecosystems and developer projects getting scaled down in terms of size, and that is going to happen," he said.

According to PropEquity, housing sales dropped 9 per cent 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 15 per cent to 4,11,022 units in 2024 on the back of two quarters of under-activity due to general elections and monsoon, it added.
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