Here are homes for you & me

Money matters

Budget apartments have been doing fairly well in Bangalore. People have bought and continue to buy properties below Rs 10 lakh, between Rs 10 lakh and Rs 20 lakh, and between Rs 20 lakh and Rs 25 lakh. 

These are the three sharpest segments in the budget category according to real estate players in the business.

Affordability matters

Ramesh Ramanathan, urban researcher, is also into construction of affordable homes and he, along with his colleagues, has been able to reach out to people with very low incomes around Hosur Road, close to Chandapura. 

“We launched Janaadhaar Sobha, a cluster of 480 one bedroom apartments. To our astonishment, the apartments sold out,” he says. 

The apartments, priced at Rs 6 lakh-6.5 lakh, were bought by people in clerical posts, vegetable vendors, auto drivers and factory workers. 

Ramanathan says the biggest challenge was to keep the pricing low. 
 
“It gets harder to offer quality property as you bring down the overall cost, because everything around you, including the raw materials — iron, steel, sand and bricks — is getting expensive.” 

How does one make profits? 

“We didn’t make any profit with our first project. 

To break-even, we have planned a second set of apartments in the Hosur Road-Chandapura area. 
 
These apartments will be two bedroom and will cost around Rs 20 lakh. We’re hoping that some of the losses we incurred in the first project will be covered up by the second project.”

There is no worry about finding buyers, says Ramanathan. 
 
“Demand for housing is high in Bangalore. And the demand is at various levels — from Rs 10 lakh to a crore and more. Demand for housing is not a worry.”

Real estate trends 

Zahed Mahmood, a real estate player, says the demand for houses priced between Rs 10 lakh and Rs 25 lakh is high. 

The apartments in this category would be between 500 sq ft and 1,000 sq ft. 
 
Such apartments, he says, are typically located in the peripheries of Bangalore — they would not have quick access to the city centre, but may have access to suburban markets, malls and entertaining spaces.

“Most budget homes are built in Anekal, Peenya, Nelamangala, Doddaballapur Road, Devanahalli and Hoskote. 

Though there is no shortage of demand, the question is — can people afford even budget housing? 

As of now, many have been able to take loans and pay the developer in instalments. 

Owing a home is everybody’s dream. 
 
The only way to break-even in budget constructions is to have large transactions or high contracts which can make up the money spent on budget homes,” says Zahed. 

“People can’t spend too much and low quality homes are a no-no. 

So costs have to be recovered in other projects to ensure that budget constructions get through. 

There can’t be isolated projects also,” says Zahed. 
 
“Integrated development is vital. Concentration should be on linkages to satellite towns and there should also be some sort of group insurance schemes.”

Value homes
 
The Value and Budget Housing Corporation (VBHC) is focused on budget homes at low costs. 

Jerry Rao, who has been instrumental in setting up the corporation, believes there are no national players in the value housing sector and that regional players aren’t offering anything substantial for a price band lower than Rs 30 lakh. 

This gap is what brought forth VBHC. Two projects the group has are the Vaibhava Anekal and Vaibhava Kengeri in Bangalore. 
 
The group is targeting people earning in the range of Rs 15,000 to Rs 40,000 a month and the size of such apartments would be between 614 sq ft and 900-plus sq ft, depending on two or three bedroom choices. 

Affordable for VBHC goes up to Rs 30 lakh. With not too many players in the budget housing sector, VBHC could make a profitable intervention.

Now, times are such that people from the lower economic strata are able to afford houses priced from Rs 4 lakh-Rs 7 lakh. 
 
This is based on the presumption that their incomes too have gone up, though rising inflation may play spoilsport.

For example, construction workers are paid anything from Rs 500-Rs 800 per day, depending on the project they work on; plumbers charge nothing less than Rs 800-Rs 1,000 for any work that is a little more than just changing taps; electricians charge you not less than Rs 300 per task, unless it is very minor. 

And, the feeling seems to be that this class is putting away some part of the money for a safe, secure and stable housing. 
 
Budget home players have made this assessment and are therefore moving ahead with their projects. 

The hope is that the bubble won’t burst and that the market economy has a safety net for the weakest of all.

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