The recessionary phase has, perhaps, made the builders change strategy and think of offering projects to people on the lookout for budget homes.

For this segment, a rather big one, the priority is owning a house and luxuries such as a swimming pool or a spa are low on the agenda. The builders here had not addressed this need well earlier.

Their target had been mostly the non-resident Indians who had funds to invest in property. But with the recession making this section delay new investments, the builders seem to have found a new market in the budget section.

Late entry

“It is not really true that builders have ignored the budget segment,” says Jayanthan Namboothiri, managing partner of Lotus Properties. The concept of flats has made a late entry into Kerala.

The upper segment of society readily accepted it and the builders were ready to meet the requirements of this section with luxury amenities.

These include anything apart from the basic flat and facilities.

What adds to the cost are facilities such as swimming pool, a Jacuzzi, a jogging track, a private jetty if it is a waterfront project, a health club, a spa and so on.

The budget buyers have looked upon living in flats as a luxury which they cannot afford.

The budget and low-budget flats have made a mark during the recessionary period. A major problem during the boom time has been the skyrocketing prices of land, Mr. Namboothiri says. Many people are interested in buying flats with areas of about 1,000 sq ft and prices in the range of Rs.25-30 lakh. Rajeev Kumar Cheruvara, director, Apple a Day Properties, says that there is a large segment for whom housing is a need and not an investment. The construction sector has failed to address the needs of this segment, he says, as most builders were not offering products that the end-user really needs. In many other industries, the profit margins range from 20-50 per cent, perhaps, but in the construction sector, the boom time has given builders 200-300 per cent margins, he adds.

Corrective measure

The recession is actually a corrective measure so that there are houses available at affordable prices, Mr. Cheruvara says. A good number of families have combined annual incomes ranging between Rs.4 lakh and Rs.6 lakh each.

A sum of Rs.25 lakh is the maximum that they can afford for a house.

Builders should have products with prices ranging from Rs.6 lakh to Rs.1 crore so that it can cater to all segments. There needs to be products that range from the popular to the premium in the housing sector, he adds.

A large number of people in the lower segment of society continue to build houses themselves on small plots of land.

Mr. Cheruvara says that one-bedroom villas at affordable rates will attract that segment.

A person who likes to build a house on three cents of land will be attracted. All these need to be without frills as people in this segment are looking for shelter and not luxury.

Though food, clothing and shelter are the basic needs of man, shelter has become rather speculative, he says. This is because the product is being designed for speculation.

Such affordable housing is usually found a little away from the city, maybe 6 km to 10 km away or even more. But some builders have started offering budget flats even in prime locations.

Anil Gopinath, marketing manager of Galaxy Homes, says, “We have found a good demand for two-bedroom apartments for Rs.10-15 lakh going up to a maximum of Rs.30 lakh. Two-bedroom flats with areas of 600 sq ft each have a good demand if built in the city. The location and price both have to appeal to the customers.”

These flats will have basic facilities and security but will be devoid of luxury amenities. Such housing will be a relief to a large number of people who find it difficult to build a home.

Low awareness

Mr. Namboothiri believes that awareness of living in flats is low in villages. This can be one reason that people feel reticent about approaching the builders.

It is people in urban areas who have picked up flats built in panchayat areas.

A change in attitude is, perhaps, round the corner and the builders catering to the segment believe that the demand in this segment is bound to increase slowly.

Mr. Cheruvara says that if affordable property is built, there will definitely be a buyer.
News Published Under:  The Hindu