The affordable housing sector has seen a massive surge of close to 100% (double) in new launches in the first half of 2016 (H1 2016), as against the same time last year, according to a report by real estate consultancy Cushman & Wakefield. The total number of affordable housing (up to 70 lakh for Mumbai and Delhi; 20 lakh to 50 lakh for rest of India) units launched in H1 2016, in the top eight cites, were recorded at over 17,000 units; while the total units launched in these locations were recorded at 60,000 in H1 2016, registering an increase of nearly 17% year-on-year (y-o-y).

In terms of volume, however, mid–ranged housing (70 lakh to 2 crore for Mumbai and Delhi; 50 to 1.2 crore rest of India) saw the highest number of launches at 36,267 units in key markets, recording 10% increase y-o-y in H1 2016.

High-end residential units (2-5 crore for Mumbai and Delhi; 1.2-2.5 crore rest of India) saw a decline in the total number of units launched in the H1 2016 period, which was lower by 29% in the period.

The highest supply of affordable housing was recorded in Pune at 4,170 units, followed closely by Bengaluru at 4,155 units. Mumbai saw the highest number of total launches in H1 2016 with over 12,000 units being added to the residential stock across all categories, followed closely by Bengaluru with approximately 11,000 units of new residential units.

Chennai saw the fewest unit launches in the first half of 2016, owing to a slowdown in construction activities in the city.

The rise in the launch of affordable housing can be attributed to a steady demand for this segment of housing in Bengaluru, Delhi-NCR and Mumbai. The uptake in the market may have a cascading impact on the overall economy.

More projects are expected to come up given that there is a cost benefit in building these units. The time taken from ground breaking to completion is lower than that for the mid- or high-end apartments. Also, sales can happen a lot faster, thus helping developers realise costs earlier than usual.

Further, with the government defining the affordable space as 30 sq. metre in tier-1 and 60 sq. metre in tier-2 locations, and announcement of benefits for development of such apartments, this segment of residential housing is expected to grow.

NCR is an exception

Delhi National Capital Region (NCR) recorded a total of 7,614 units in the first half of 2016, a 22% decline compared to same period last year. The only segment witnessing an increase in supply is the mid-segment at 4,229 units, a marginal increase of 11% compared to H1 2015. The affordable segment fell by 44% y-o-y at close to 3,000 units.

Of the total launches, over 70% were in Gurgaon in Sohna, which will see the advent of approximately 2,100 units in the next 3-5 years.

Apart from a decline in the number of units, the average launch price of Delhi–NCR also saw a decrease of 19% y-o-y. The average unit size saw a marginal improvement of 5%. The average ticket size for new launches in the affordable segment was recorded at 31 lakh, while the same was 37 lakh in H1 2015, a drop of about 16% in ticket size of affordable housing units in Delhi-NCR. Capital values in most sub-markets declined. Capital values in the high-end segment declined by 1-3% in Delhi’s southern submarkets.

Edited excerpts from report Q2 Residential Sector Release.

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