With an increase in housing and income standards of middle and higher income groups, global real estate consultancy Cushman & Wakefield (C&W), on Wednesday, said that the national capital region is expected to witness the highest demand of 778,000 housing units in next five years, according to the C&W report.
The report has also estimated that the total new housing demand will be nearly 12 million units in the next five years (2013- 17). This is based on the estimated growth of population across India and in major cities. “Of the pan India additional demand, the top 8 cities will constitute approximately 23 per cent. Of this middle income group (MIG) and higher income group (HIG) categories constitute majority of the demand at 2.5 million units alone,” the report said, adding that the demand for LIG will be relegated to a mere 300,000 units in these 8 cities, due to increase in housing and income standards that are expected to be witnessed in these key economic centres of India
Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield said, “The gap between fresh demand and supply is expected to see an incremental expansion as supply will fall short on account of economic, regulatory and political scenario. However, some of the demand in the next couple of years can be met through the existing vacant stock. Of the 11 mn units that the government estimates are currently not under use from their owners, in our opinion between 40-50 per cent can be considered for future usage and could service some of the new demand.”
The gap between cumulative supply and demand (in both MIG and HIG categories), in the period of 2013-17, is estimated to be approximately 45 per cent in the top eight cities where demand is higher than supply.
“Most cities are facing a short fall of supply especially in the mid end segments, leading the gap in demand and supply, as developers are less keen on smaller ticket prices on account of high land costs, surmounting construction costs and reduced profitability,” it added.
As per the report, financing large scale projects are also becoming a challenge for developers as financial institutions are wary of lending to the real estate sector going by the directive from RBI and Securities and Exchange Board of India (SEBI).
Looking forward the high end cities, the report said that Chennai is expected to see the highest demand – supply gap with supply falling short by over 80 per cent of the expected demand, while Mumbai is expected to see the least imbalance in demand and supply with demand outstripping by only 5 per cent albeit, most of the supply will be in the HIG category leaving MIG underserviced.