The Business of Affordable Housing in Patna

The definition of affordable means different for different people depending on the socio-economic class, income levels etc. The term applies most pertinently to housing created for the EWS (Economically Weaker Section) of society so that they, like the middle class, can also benefit from the financial and emotional security of home ownership.

We are looking at an interesting new phase in Patna real estate where affordable housing in Patna will get preferred rather than 'poor cousin' status it has hold till now. The slump in Patna property market has clearly showed its stakeholders that is the best hedge. An interesting and important fact related to Patna real estate is that affordable housing projects have the fastest absorption rates. In other words, the creation of more affordable housing makes sense not only from a socio-economic point of view but also in terms of the real estate business. The demand in terms of units is phenomenal, and developers in Patna who have been focused on affordable homes from the start (or who are getting into this segment now) can build and sell their projects for years to come. Though affordable housing has not seen the kind of growth that Patna requires in this segment, it is in fact the most sustainable business model for real estate developers in Patna. Developers who concentrate on this segment of housing are completely insulated from recession or sentiment-induced market slowdowns.

Affordable luxury

In fact, genuinely affordable housing - projects wherein units are priced around Rs. 20 lakh - are completely recession proof since demand is not only steady but in fact constantly growing. As a direct effect of this dynamic, affordable housing is now also the most preferred asset class for property investors. There has been a huge supply in mid-income and high-end properties in Patna, but a marked lack of willingness among buyers to pay the high rates for residential spaces. As a result, we are seeing more and more investors focusing on budget homes.

Clearly, affordable housing is a business vertical that has stood the test of time when larger format housing has failed to attract buyers and investors in Patna. Today, larger developers in Patna who previously focused only on mid-income and high-end housing projects are seriously looking at building up their presence in affordable housing, as well. Their rationale is that the higher-volume/lower-margins affordable housing segment is a reliable hedge against the market slowdown in costlier housing, and also because budget housing is a new means for reputed developers to leverage their brand value.

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