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Recently, real estate player DLF Ltd, which made its name developing high-income housing in New Delhi's southern suburb of Gurgaon, said it is looking at building homes that could sell for Rs 40-50 lakh to fulfill the demand for middle income housing. Initially, the company plans to build middle-income houses in cities such as Bangalore, Chandigarh, Chennai, Indore and Kolkata. These would be typically two-bedroom apartments and would cost Rs45-50 lakh.

"We will be focusing on middle-income housing," DLF vice-chairman Rajiv Singh said at a press conference announcing the company's first quarter earnings. The company will start work on the middle-income housing projects this quarter. According to the Asian Development Bank, India will need 10 million new housing units a year by 2030. To meet this demand, leading developers are turning their focus to affordable homes.

Realty players are also turning to middle income houses to hedge the downside from a possible fall in demand for luxury homes. Interest rates, which are at a five-year high, and stock markets that have seen a rapid decline in values have sucked some of the loose cash out of the system. The demand for middle-income houses outweighs the demand for luxury homes. Too many enquiries come for houses in the Rs 30-40 lakh range. But nothing is available now in the metros.

Middle-income housing is a volume game and the company will be expanding into other cities as well. DLF is expecting a revenue of Rs 8,000 crore from middle income houses once the project is on full steam.The company has already acquired land in New Delhi. The project will start in a couple of years. The company expects middle income housing projects to account for 20 million sq. feet of the 50 million sq. ft it plans to develop every year thereafter.

Source: Live Mint - 10 Aug'-07