A fortnight ago, Jaypee Greens started bookings for its housing project -- Aman -- at the 70-acre residential township on the Greater Noida Expresssway. All the 3,000 flats, priced at Rs 2,100 a sq ft, were sold out by the first day. Exactly a year ago, the Jaypee Group company was offering flats along the same expressway for Rs 4,500-6,000 a sq ft.
Two days later, another Delhi-based developer, BPTP, announced that it had received bookings nearly four times more than its offer of 1,000 flats at its 1,500-acre township at Faridabad.
Welcome to the great Indian home rush at a time when the glitter of the premium segment has faded. Real estate companies are now going to the other extreme and falling over each other to offer affordable housing at a price range of Rs 500,000 to Rs 50 lakhs (Rs 5 million).
The varied pricing is a function of affordability being a relative term, depending on the location. For instance, a Rs 50- lakh (Rs 5-million) apartment in Mumbai is considered affordable housing. In a city like Nagpur, the same price will qualify for premium housing.
There is no confusion, however, with the huge target consumer base: 23 million Indians earning at least Rs 5,000 a month who do not own a house but aspire to do so, according to a study by Asish Karamchandani, CEO of Monitor India, a management consultancy firm.
That's a good enough reason for Unitech's GM (Corporate Planning) R Nagaraju to say the company would be "churning out affordable flats just like a factory produces goods".
The country's second-largest developer has shelved all premium housing projects for now. Poor response from buyers also prompted the company to recently convert its luxury project, Unitech Grande in Noida, to a mid-income project.
If Jaypee and BPTP hit the jackpot in the National Capital Region, others weren't far behind. The Lodha Group, for example, has broken the sub-Rs 2,000 per sq ft price barrier in Mumbai by launching a 6,500 unit affordable home project at Dombivli at Rs 1,998 a sq ft. The integrated township will be spread over 125 acres with 3,500 houses.
The scene is the same elsewhere in the country. Bangalore-based CSC Constructions has launched three projects in the IT city, offering 2,000 apartments at Rs 500,000-13 lakhs (Rs 1.3 million). Encouraged by the response, CSC has six more such projects in the pipeline.
Chennai hasn't escaped the low-cost housing bug either. A subsidiary of Puravankara Projects, for example, sold 2,500 such homes in the Tamil Nadu capital within days and is now planning to develop 60 million sq ft of such properties over five years across five cities.
There are no firm estimate of the total number of such affordable flats on offer, but back-of-the-envelope calculations show top developers such as DLF, Unitech, HDIL and others are planning over 55 million sq ft of new launches this financial year, around 90 per cent of their total number of new projects.
According to a study by PropEquity Research, 74 per cent of residential apartment sales in Mumbai in the first quarter of 2009 came from the low-cost segment. The trend was the same in Gurgaon and Chennai, too, where the corresponding numbers were 60 and 58 per cent. In all these cases, the apartment sizes were reduced and the average prices corrected 15-25 per cent, PropEquity data show.
This shift towards low-cost or affordable housing started after home sales fell up to 70 per cent in the early part of this calendar year from their peak in 2007-08.
"People were earlier going for aspirational houses, as their salaries were going by 20 to 25 per cent every year. But now they have realised that salaries are not going to go up any time soon and those who have reached the top levels have already bought houses," said Anshul Jain, chief executive officer, India, DTZ International Property Advisors.