The shifting focus of builders
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Builders have reworked strategies and repositioned products. SHYAMA RAJAGOPAL says they are looking into low-cost offerings.
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Housing for all: Affordable houses are liveable houses minus the frills and less common spaces.
Only a few builders offer housing to those unable to raise huge sums of money to have a roof over their head. There has been talk of providing affordable housing since moneyed people stayed away from investing in property from the last quarter of 2008 when the global recessionary winds started blowing this way too.
Almost eight months into the tough times, the builders in Kochi are reworking strategies and repositioning their products. The main focus is to complete ongoing projects. Selling is difficult, but much strategy goes into offering a bargain to the customers who wait and watch on the sidelines.
Once enough client strength is garnered for a project, the last batch of units can be sold at a higher price to make a profit. This is the way most builders have managed to get clients for their ongoing projects.
Apple a Day Properties recently handed over 456 units, comprising villas, studio apartments and one-, two- and three-bed apartments. A number of other small and big builders are keen on advertising that they have completed their projects. This forms part of strategies to gain investor-buyer confidence. Handing over of completed projects boosts the confidence of all associated with the project — from the promoter to the flat owner down to the mason.
Now the targeted customer profile has changed. Even big builders have repositioned themselves to provide affordable housing. As land costs in cities make it impossible to provide houses on a shoestring budget, it is the suburbs that will house these projects.
What has made the change is the fact that investments from overseas have more or less dried up. With Dubai markets dull, builders are now trying to reorganise their customer base.
Other foreign markets are not so bad compared to Dubai, but the effort to get past the difficult procedures in other countries has made the builders look inwards to the domestic market, where there are enough needy customers looking for a cost-effective purchase.
How is affordable housing achieved? Mainly, it involves cutting down common spaces and luxuries. But these are liveable houses. Compared to housing provided for lower- and middle-class sections in Mumbai and Delhi, the smaller living spaces in Kochi are much better.
The pricing is attractive for those who are thinking of a house. Starting from Rs.10 lakh, the prices go up to Rs.20 lakh. Some builders are even offering a little lower from Rs.9.5 lakh to Rs.9.75 lakh as an opening price for early bookings. In cities such as Pune and Hyderabad, there are builders offering a strikingly lower price to attract the initial customer. Such offers are, perhaps, yet to make an appearance here.
The builders here complain about scarce land availability, the main cause for land prices to remain on the higher side, though in certain places, the prices have come down to half of those a year ago. But then that was also the result of a highly inflated price when property was on the upswing.
Secondary market
The builders believe that the government has to play a stellar role in making the property market look good on the secondary market. As of now, land transactions have become meagre and the government is losing out on revenue that had kept flowing till last year.
The stamp duty on second sales need to be brought down, says Kunnel Antony, secretary, Kerala Builders Forum. This is the only way to create a momentum in the market, he adds.
The banks will come around and loosen up their funds into the market soon enough, believes Mr. Antony. It will begin to tell on their bottomlines if they do not infuse funds into the market.
Since sales have picked up in some of the sectors, such as automobiles, it is more than likely that housing will pick up too, Mr. Antony says.
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