At NAREDCO's Silver Jubilee 25th Foundation Day conference in Hyderabad on August 26, experts highlighted that infrastructure remains inaccessible for the majority of suburbs across Indian metro cities. They stressed the need for housing to remain affordable in order to stay on track for India's goal of achieving a $5 trillion economy.
Vemula Prashanth Reddy, Minister of Legislative Affairs and Housing of Telangana, stated, "Governments will have to create environments specific to the state or city. For example, in Hyderabad, infrastructure projects like strategic roads and over 36 flyovers have reignited private investor interest, boosting the real estate sector."
Furthermore, he noted that the Telangana government has invested over Rs 86,000 crore in irrigation projects and Rs 1 lakh crore in the power sector to stimulate the city's economy, making Hyderabad an attractive destination for further investments.
The Knight Frank report, titled "India Real Estate-Vision 2047," presented at the event, projected that India's economy could range between $33 trillion to $40 trillion by 2047.
However, Amit Kumar Singh, Managing Director of the Central Warehousing Corporation of India (a statutory body under the Ministry of Consumer Affairs, Food & Public Distribution), remarked that infrastructural developments need to triple compared to GDP growth. He added, "Land is the most crucial aspect. We have to standardize the designs for better solutions for land utilization."
Singh mentioned that the central government body is currently targeting significant private investments, exceeding Rs 15,000 crore, spanning 26 million square feet across 85 locations in Tier I and Tier II cities.
Affordable real estate remains cautious
The Knight Frank report pointed out that while demand for housing will remain concentrated in affordable housing, it will gradually shift towards mid-segment and luxury housing by 2047.
Real estate capital values and rentals have skyrocketed across metro cities, with metropolises like Bengaluru seeing a major uptick in premium housing segments. The cost inflation, due to global headwinds and soaring land costs has dented the affordable segment.
The share of new residential launches in the affordable segment has come down to 31 percent last year from 50 percent in 2019, a recent report said.
Yet, Venkaiah Naidu, former Vice President of India reminded that housing needs to be affordable with sustainable architecture over the next 25 years. "After purchasing the property or house or commercial establishment, one should not feel sorry. If you are able to make it, that's really great. Happy, affordable housing for all is the need of hour," he said.
Rajan Bandelkar, President of NAREDCO told Moneycontrol that the affordable segment in India is shrinking and needs further government interventions. "For Rs 1 crore house, about Rs 33 lakh or one-third goes to the state governments in taxes. This has already impacted the local developers. From NAREDCO, we have signed up with several cement and steel companies for bulk buying to tackle the affordability," he added.
However, other experts say that while the segment is not shrinking, its growth has slowed down significantly, especially after the RBI repo rate hike. The RBI hiked the repo rate by nearly 250 bps from 4 percent to 6.5 percent as of date.
"Affordable segment will recover swiftly as soon as the home loan interests come down to about 6.5 percent --- thus boosting homebuyers' sentiments," NAREDCO's Vice Chairman, Niranjan Hiranandani added.
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