Bengaluru: Lodha Developers Ltd, known for its luxury residential projects in Mumbai and London, expects over 50% of its sales—or around ₹5,000 crore—to come from mid-income housing projects in 2018-19, said a top company executive.
The Mumbai-based firm, India’s largest residential developer by sales, expects its housing business in the ₹35 lakh-₹1 crore segment to grow significantly faster than other verticals over the next 2-3 years. The sub-₹1 crore price segment in the housing sector has been selling well in Mumbai, the country’s most expensive property market, and Lodha plans to focus on it as well. Lodha clocked around ₹4,200 crore in sales for the April-September period. It expects sales to go up by 10% in the current fiscal over the ₹8,150 crore in 2017-18.
“There is a clear demand for mid-income housing projects and we expect continued growth in this segment. We are happy with the kind of sales the company has clocked given that we operate in one of the most competitive markets. There is an oversupply issue in the premium housing segment, which is why it’s been slow,” said managing director Abhishek Lodha.
Lodha develops mid-income housing across different suburban locations including Palava, Thane and Upper Thane, and smaller developments catering to the same segment in Andheri, Jogeshwari and Mira Road.
The increase in buying power of homebuyers combined with the government’s focus on affordable and mid-income housing through the Credit Linked Subsidy Scheme (CLSS), lower goods and services tax (GST) for affordable housing, and income tax rebate, have helped in the business to grow, said Prateek Bhattacharya, deputy regional CEO, Lodha Group.
In 12-18 months, the firm has plans to ramp up its mid-income housing portfolio. “Wherever we are planning a new phase in an existing project or in a greenfield development, we are trying to do more affordable homes. More people can afford a home in the ₹50-₹70 lakh category and this is a unique form of urbanization that Lodha is trying to tap into.” Bhattacharya said.
In Mumbai, many developers are shrinking the size of homes and making them more affordable, given that there are not many takers for luxury units. An October survey of 300 builders by QuikrHomes said 50% of developers are launching affordable projects for under ₹50 lakh, with Mumbai, Chennai and Kolkata leading the trend.
Price is the main determining factor for young buyers, and affordability and compact homes are a common pattern in newly-launched projects.
In July, Lodha received capital markets regulator Securities and Exchange Board of India’s (Sebi) approval for its initial public offering (IPO). The developer is planning to raise ₹5,500 crore through the proposed share sale, expected to be launched next year.