Surging Housing Shortage in India
The persistent population boom in India results in a significant deficit of residential units. According to Cushman and Wakefield, major cities face a dire need for approximately 2.1 million new housing units to cater to the surging demand. The real estate sector must rise to the challenge by introducing new residential projects to address this escalating issue. Real estate will play a crucial role.
Cities with High Demand
Cushman & Wakefield noted that eight of the largest cities in India will account for 18% of the total demand. These cities include Chennai, Mumbai, Pune, Bangalore, and Kolkata. Steady economic growth coupled with rapid population increase draws more inhabitants to these urban centers, leading to higher population density and escalated demand for housing units.
Future Demand Projections
Real estate consultants forecast that over the next five years, the demand for housing units in major cities alone will exceed 2.1 million units. Around 50% of this demand is projected to be for mid-income segment properties. By 2016, the demand is estimated to reach approximately 12 million housing units, based on historical population trends and income classification for households.
Segment Demand Analysis
Approximately 59% or around 1.3 million housing units will be sought by the mid-income group in the eight primary cities. The higher-end market will demand about 451,000 units, while the lower segment will require about 362,000 units.
Economic Stability as a Pull Factor
Sanjay Dutt, Executive Managing Director of Cushman & Wakefield India, stated that the high demand in these leading cities reflects their economic stability and strength. Economic power is the primary driver for population migration to these cities. The rising demand for mid-range housing units indicates the presence of an economically viable population in these urban areas.
Growth Rates and Regional Demand
The demand for housing units is projected to grow at a Compounded Annual Growth Rate (CAGR) of 2.8% across India. Bangalore stands out with a CAGR of 4.1%, followed by Pune and Hyderabad in second and third positions, respectively. A demand of about 381,000 units from mid and high-end segments is expected in the National Capital Region (NCR) from 2012 to 2016.
Regional Demand Breakdown
- Bangalore: 338,546 units
- Chennai: 257,796 units
- Hyderabad: 199,575 units
- Mumbai: 188,708 units
- Ahmedabad: 173,394 units
- Pune: 144,422 units
- Kolkata: 77,000 units
Approximately 45% of the total demand is from the mid and high-end sectors, reflecting the financial stability of these cities.
Luxury Homes Market
Gurgaon sees the highest demand for luxury homes, with some ultra-luxurious housing units sold at Rs 30,000 per square foot and others at Rs 14,000 per square foot. In contrast, high-end apartment projects in Greater Noida are sold at prices ranging from 6,000 to 8,000 per square foot.
Conclusion
The future necessitates a greater number of housing units to meet the growing demand of the burgeoning population. Only substantial growth in the real estate sector can address this pressing need.