'Never seen in my 45 years plus of business': Niranjan Hiranandani says affordable housing is in deep trouble

The sharp slowdown in India’s affordable housing segment has become a major concern for the real estate industry, with Niranjan Hiranandani, Managing Director of Hiranandani Group of Companies and Chairman of the National Real Estate Development Council (NAREDCO), warning that the decline seen over the past 20 months is unprecedented in his decades-long career.

“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,” Hiranandani said during a conversation with CNBC-TV18.

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Hiranandani said India cannot sustain long-term growth without addressing the housing needs of lower-income groups.

“It can't happen in India because you have to cater for that segment,” he said.

The real estate veteran said rising land prices, inflation and expensive homes have widened the affordability gap, making government and private sector intervention necessary.

“How can you have Atmanirbhar Bharat and growth and prosperity that we see without this segment taking place?” he noted.

Rental housing may emerge as solution

Hiranandani suggested rental housing could become a long-term solution to the crisis, similar to the commercial real estate model.

“We only think that rental housing going to be the answer to that. Just like you have rental for commercial, you will have to do it,” he said.

He added that both the Centre and state governments are considering the idea, while calling for incentives and wider participation from CSR funds, charitable trusts and private developers.

“And I think we will have to give some incentivization to create it. And CSR money, charitable trusts, and others will have to create something on rental housing in the next couple of years because this segment is scary,” he said.

Post-pandemic buyers 

Hiranandani also said the Covid-19 pandemic has fundamentally changed what homebuyers expect from residential projects.

“I think there is a demand for a quality of life which did not exist uh was not present prior to COVID. Earlier if you gave them a good house a good building they were very happy. That's gone,” he said.

According to him, buyers now prioritise integrated developments offering transport connectivity, hospitals, schools, shopping centres and entertainment hubs nearby.

“They want all the facilities conveniently the accessibility, the transport, the hospital the availability of uh uh shopping mall as he mentioned over there and other facilities to be close,” he added.

‘Isolated buildings’ no longer enough

Hiranandani said developers can no longer depend on standalone projects in distant suburbs unless they create complete ecosystems around them.

“So you now create destinations. So you you can today be 10 km away or 20 km away and you create that as a destination and you bring all these facilities together,” he noted.

He warned that projects lacking surrounding infrastructure may struggle to attract buyers in the future.

“So today when you say that I'm far away destination but you're making an isolated building, that's not going to work anymore today. It's gone,” he said.

Bengaluru traffic draws criticism

Speaking about infrastructure, Hiranandani criticised Bengaluru’s traffic congestion and stressed the importance of connectivity in driving future real estate growth.

“You better do something about Bangalore. The traffic is horrible,” he remarked.

He contrasted Bengaluru’s challenges with infrastructure expansion underway in Mumbai, including metro projects, the coastal road and new airports.

“We are going to put 300 km of metro in the next 2 years. We have a cross harbor bridge. We are doing Mumbai 3.0. We have the second airport. We are planning the third airport,” he said.

According to Hiranandani, infrastructure-led development will create new growth corridors across Indian cities.

“You're getting areas where the growth story is going to be stupendous and the places where the things are not going to grow equally strong,” he added.