Investing in Affordable Housing in Lucknow: Opportunities and Challenges

The city of Nawabs, The Golden City Of The East, Shiraz-i-Hind and The Constantinople of India- Lucknow, the city that was identified with rich heritage, is now identified with modernisation, development and world-class infrastructure. As a domino effect, the real estate market in the city is an all time high. With such impressive fast track progress, Lucknow is, in the present day, carrying more than half the chunk of rising real estate on its shoulders. The fast constructions of high rises, homes and floors has given the expanding middle class secion of residents hope and an opportunity live the high end life in affordable budgets. The city has made many dreams a reality by providing top class residential amenities at affordable prices- and this has been a major catalyst in the surge in the availability of affordable housing in Lucknow.

Opportunities

The demand for affordable housing in Lucknow is attributed to the growing middle class and the incursion of people from other surrounding cities seeking employment and a new lease of life. In recent years, Lucknow’s rapid infrastructure developments such as the IT City and the Metro Rail project have contributed immensely to investors and homebuyers thronging to invest in property here.

Lucknow has secured its place as one of the most progressive smart cities in India, which has witnessed an increased interest from both- the developers and the commercial investors, alongside offering affordability.

Additionally, in prominent areas such as Gomti Nagar Extension, Indira Nagar and new allotted sectors of Gomti Nagar Township, Lucknow Development Authority has allowed private development.  Experts say that real estate in Lucknow is expected to garner interest, grow by 10-12 % annually and observe the status quo as an affordable and credible market in the coming years, credited to infrastructural, social and economic growth.

Challenges

The affordable housing segment is going through several challenges that can hinder the ‘Affordable housing for all’ target. The first reason is the unavailability of land at locations that are desired most and are in high demand by buyers. The second and most pertinent reason is the increasing cost of raw materials. High-cost material means difficulty in fitting the budgets of the affordable segment.

Government Policies and Incentives

UPAVP has been making efforts to ensure affordable housing in Uttar Pradesh. The body has built exhilarating habitats that are inclusive of facilities such as environmentally refreshing surroundings,  to fulfil the desires of middle-income groups.

The government's Pradhan Mantri Awas Yojana (PMAY) has made it possible for the middle-class sect to afford homes that can extend a good lifestyle within their budget. The aim of the initiative is to provide affordable housing for all. The scheme grants subsidies and incentives to developers who build budget homes. Under the PMAY, developers can also avail of credit-linked subsidies of up to Rs. 2.67 lakhs per unit for the construction of affordable homes. Several regulations have been relaxed for the benefit of the developers to invest in affordable housing.

Lucknow Development Authority’s project, Sultanpur Road Yojna is one of Lucknow’s newly developing residential localities, situated on the east side of Lucknow.  Adjacent residential areas like Gomtinagar Extension, Ansal Golf City and  IT City Scheme offer an array of multistorey apartments and villas. The area’s close proximity to top-notch schools, hospitals, shopping malls and HCL IT City is an added advantage.

Risks and Mitigation

Though affordable housing in Lucknow has extended considerable benefits in terms of development and inclusivity, this sector is prone to many risks.

One of the biggest risks is the challenge faced by nonprofit organizations. These organisations often face threat in selecting and purchasing  reasonable housing to acquire and sell to middle and low income groups. This is more rampant when buyers fail to conduct proper research on the costs and acquisition process to avoid facing financial risks.

Delays in approvals is another challenge facing affordable housing, leading to cost overruns. This can be mitigated by the developers by partnering with credible consultants who can apprise them about the regulatory processes.  Market Trends and Demand Analysis:

Financing Options for Affordable Housing

Pradhan Mantri Awas Yojana (PMAY) has gifted a boon to the affordable housing sector by providing subsidies and incentives for developers. Apart from this, developers acan avail of easy and quick loans offered by several financial institutions. Partnering with private equity firms and investors is another option available for the developers. These partnerships can prove fruitful for raising funds for projects.

Lucknow is certainly on a rise. Though Investing in budget homes in Lucknow presents several opportunities and challenges for real estate developers, the fast track infrastructural development, high demand, government policies and financial opportunities have propelled the affordable housing sector in Lucknow forward. The sector can be a profitable bracket if delved into, taking proper financing, planning and execution into consideration.