By Bappaditya Chattejree

Kolkata, Oct 17 (IANS): Notwithstanding the implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA), and the Goods and Services Tax (GST), demand in the residential markets across cities remains sluggish, but the affordable segment is seen as the growth driver in the coming months, experts say.

And, to tap the investment sentiments associated with the festive season and counter the subdued markets, developers have started offering innovative marketing schemes aimed at increasing the sales of unsold properties.

"We are seeing some green shoots of revival in the housing sector, but they are very tender right now. GST and RERA have helped infuse a new sense of confidence among buyers, but there is still a lot of confusion about them and RERA has not even become a nation-wide force as yet," JLL India's CEO and Country Head Ramesh Nair told IANS.

He said more developers are now considering "moving into or expanding" their portfolio in affordable housing, that addresses the housing needs of the lower or middle income households

"This is the only really vibrant segment in Indian residential real estate at the moment. Margins are low but demand, and therefore potential sales in terms of numbers, is extremely high," Nair said.

Echoing Nair, Anarock Property Consultants Chairman Anuj Puri told IANS: "Affordable housing has gained fresh momentum of about 15 per cent in terms of launches in the last three months, as compared to the previous quarter."

According to the latest research report by leading global real estate services firm Cushman & Wakefield covering the top eight cities of India, the affordable housing sector has recorded a surge of 27 per cent in new units launched year-on-year.

"Affordable housing is an attractive proposition for both developers and consumers as the demand is huge and largely unmet. The high focus of the central government has resulted in the availability of more funding options for the developers such as ECB (External Commercial Borrowing), FDI and debt financing from national financial institutions at highly competitive rates," Shveta Jain, MD, Real Estate Private Wealth Services, India, Cushman & Wakefield, told IANS.

According to analysts, developers have refrained from fresh launches and are focusing on clearing their existing inventories. This approach has resulted in a gradual reduction of unsold units.

They have increased marketing schemes such as interest subvention, possession-linked payment plans, price guarantee schemes and waiver of floor rise to defy the weak market conditions.

"Such schemes lower the effective price to the customer without having to make an explicit cut in the base pricing of the product," ICRA Limited's Vice President and Sector Head (Corporate Ratings) Shubham Jain told IANS.

With some exceptions in terms of micro-markets which are bucking the trend, price growth has been flat across most cities over the past one year.

"Prices have remained flat in the mid-range and affordable categories, and have reduced marginally in luxury housing as this was one of the hardest-hit categories after demonetisation. Demand is improving on the back of the usual festive season sentiment, but the demand increase is marginal at best," Nair said.

In fact, a notable decline in home loan interest rates over the last 12-15 months has failed to cheer up the demand.

"The total housing credit growth has been range bound in the financial year 2018 (April-July). The disruptions in the real estate market have tempered the growth of housing loans. Notwithstanding the short term glitches on account of RERA and GST implementation, the housing loan growth is expected to be healthy at 16-18 per cent for FY2018," Jain said, adding the housing credit growth is expected to grow faster in the affordable housing segment.

"As per estimates, by 2022 India will need more than 18 million affordable housing in urban areas. The affordable housing segment is now growing at a very rapid pace of 30 per cent annually. This is likely to be a $100 billion per annum market in the next five years," Puri said.