‘Luxury’ was the keyword in the last boom with Kerala builders, all and sundry focusing on the same segment. Yes, kerala was a consumer market and NRI’s and malayalees domiciled in other parts of India were the target customers. Yes, a lot many in this  audience have seen the best of places and have a concept of quality. They lapped the offerings at a ‘premium’ without too much of a difficulty. Yes some of them even went in for a second place with borrowed money, but then that was it. The frenzy was such that anyone who could afford or were eligible to finance have bought one or more properties in Kerala or elsewhere. So, assuming most of them have leveraged themselves out let us see as to what could drive the next boom.

The fact is that for the market to expand you need a new set of buyers. So who would that be? To find this out we will have to do a  bit of math and look at the logic. Let us assume that the price per square feet for a standard apartment in the major cities/towns of Kerala averaged Rs.2300. Assuming that the standard size off a 2 bed room apartment is 1000 sq ft, that works out to 23 lakhs + registration to work out to  roughly Rs. 25 lakhs. At that price assume bank financing upto 80% (Banks right now are quite wary!!) which is 20 lakhs. At an approximate monthly instalment of Rs.1000 per 1 lakh for a 15 year loan that would work out to Rs.20000 a month as EMI. Banks while checking borrower’s eligibility look at a limit of say 60% of free cash flow toward the EMI. This means one needs have a minimum monthly salary of say Rs.40000 to qualify for a loan of a that size. That leaves one guessing as to how many would qualify. The answers for the builders are available right there.

The next boom will have to driven by the concept of affordable housing in kerala. Right now this is an exception. Affordable housing does not mean builders cutting corners and quality getting compromised. The system will correct itself to work with greater efficiency and delivering quality output to the buyer at affordable prices.