Niranjan Hiranandani, Managing Director of Hiranandani Group of Companies and Chairman of the National Real Estate Development Council (NAREDCO), has expressed grave concerns over the sharp slowdown in India's affordable housing sector. Hiranandani stated that the decline observed over the past 20 months is unparalleled in his more than 45 years in business.
During a conversation with CNBC-TV18, Hiranandani remarked, "I've never seen in my 45 years plus of business the downfall of affordable housing to the extent to which it has taken place in the last 20 months. I'm scared." He emphasized that India's long-term economic growth cannot be sustained without adequately addressing the housing needs of lower-income groups.
Factors Fueling the Crisis
The real estate veteran pointed to several contributing factors, including escalating land prices, persistent inflation, and the rising cost of homes. These elements have collectively widened the affordability gap, making it increasingly difficult for the target segment to purchase properties. Hiranandani stressed the necessity of intervention from both government and private sectors to bridge this growing divide.
Rental Housing as a Potential Solution
Hiranandani suggested that rental housing could emerge as a viable long-term solution, drawing parallels to the established commercial real estate model. He indicated that both central and state governments are actively considering this approach. He called for substantial incentives and broader participation from Corporate Social Responsibility (CSR) funds, charitable trusts, and private developers to create a robust rental housing ecosystem.
Evolving Buyer Expectations Post-Pandemic
The COVID-19 pandemic has fundamentally reshaped homebuyers' expectations, according to Hiranandani. Buyers now prioritize a higher "quality of life" that extends beyond just a well-built house. They seek integrated developments offering convenient access to essential facilities such as transport connectivity, hospitals, schools, shopping centers, and entertainment hubs.
The Shift from Isolated Projects
Developers can no longer rely on standalone residential projects in distant suburbs unless these developments create comprehensive ecosystems around them. Hiranandani explained that the focus must shift towards creating "destinations" that consolidate all necessary amenities, even if located some distance from city centers. Projects lacking surrounding infrastructure are likely to struggle in attracting buyers in the future.
Infrastructure's Role in Urban Development
Hiranandani also touched upon urban infrastructure, criticizing Bengaluru's severe traffic congestion as a hindrance to real estate growth. In contrast, he highlighted Mumbai's proactive infrastructure expansion, including extensive metro projects, the coastal road, and new airports, as models for creating new growth corridors. He anticipates that such infrastructure-led development will lead to significant growth disparities across Indian cities.