India is on the cusp of a massive urbanization. Touted to be one of the top three economic powers over the next 10-15 years from now, this diverse country is witnessing a rapid influx of people into the metropolitan cities and its peripherals to enjoy better opportunities and modern standard of living.
Urbanisation Fuelling Demand
According to industry reports, people living in urban areas will increase from 462 million in 2018 to 600 million in 2030. And a mammoth 5 million homes per year need to be built from the current rate of 0.5 million per year to accommodate this urban influx.
The real estate market is pegged at $1 trillion by 2030 owing to this huge demand.
Rising disposable incomes and game-changing government initiatives have egged non-urban folks on to embrace modern, smart living opportunities, thus triggering a massive migration tsunami.
It goes without saying that urban influx directly benefits the housing sector and results in a real estate boom. Housing sales volume picked up post 2011 and real estate enjoyed a purple patch then, with high-rises mushrooming in all major cities including Delhi NCR, Mumbai, Bangalore, Chennai and Kolkata. The demand-supply gap was in place and properties in both premium and affordable range saw a robust appetite among homebuyers.
Easy availability of home loans, decreasing average household size and breaking away from traditional family structure were some of the factors which gave an impetus to the housing sector.
Urban Housing requirement projected at 100 Mn homes by 2031
Source: National Housing Bank, UN world population vision
Studies estimate that the potential market for affordable housing in urban India is huge. 91.6 million homes are required by 2021 which will swell to 213 million by 2050. The maximum rise will be seen in top 10 cities where demand for residential market is 80%.
However, the recent economic slowdown coupled with GST and RERA reforms changed the business climate of real estate. Demand for real estate slackened for some time and housing prices remained stagnant. To improve the real estate picture, renowned developers are now focusing on affordable homes with decreased floor space to meet the expectations of the customers and this initiative is paying off for them.
The demand for affordable homes has spiked with volumes outpacing the supply in some cities. People who are migrating to cities are now ready to compromise on floor space since they can at least afford a roof and enjoy the amenities that a modern city offers.
On top of that, the introduction of RERA has fuelled the confidence quotient in new home buyers. But as on date, such options in our top cities are either absent or too far flung to make real sense for home seekers.
The urban housing demand is projected to reach 4.2 million homes by 2020 for the top eight cities. During the same period, housing shortfall is expected to reach by 3 million. How are we going to meet this demand as a nation?
Lack of options ballooning pent up demand for Affordable Housing
With a lot of millennials migrating to cities in search of better jobs and lifestyle, the demand for affordable homes is already quite pent up, as is evident from the immense sales velocity that we achieve in our global affordable housing mega fests. Sadly, a lot of home seekers who register with us walk away empty handed simply because of the lack of options, mostly geographically.
In the face of economic slowdown, the real estate sector is slowly getting back on track, especially the credible developers with a proven track record but that is hardly enough to keep pent up demand in check. Projects that were side-lined for lack of demand are getting back to life, but major cities are not yet ready to adequately handle the next wave of rapid influx, consisting mostly of millennials.
Reports say that India’s urban population will contribute nearly 75% of the GDP. However, that prediction can only become a reality when India improves the civic infrastructure systems of its cities. It needs to spend nearly 7-8% of its GDP in infrastructure to make the cities liveable. Otherwise, problems like overcrowding, lack of parking space and open spaces and air pollution will continue to plague citizens in metro cities, turning our much-celebrated urban destinations into unorganized living spaces.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house