Mumbai, May 7 Tata Group has launched a low-cost housing project near Mumbai, joining a spate of Indian developers who have moved to the affordable housing segment, as demand dries up for more expensive homes.

According to the Tata Housing Development Company up to 1 billion rupees will be invested in a 1,200-unit township at Boisar, on the outskirts of Mumbai. The apartments will be sold at prices ranging between 390,000 rupees and 670,000 rupees.

The company will hold a lottery to allot the flats and will sell application forms at 200 rupees each. The flats will be delivered in about two years.

The apartment size will range between 283 sq ft to 465 sq ft each.

Tata Housing Managing Director and Chief Executive Officer Brotin Banerjee said that there is a huge shortage at the bottom end of the housing market.

"People have shown a lot of interest. The project is in great demand so we want to introduce it in other cities also. If we will have more opportunities in Mumbai then we will definitely do it there," Banerjee said.

Banerjee said costs are being kept low by reducing construction cost to about 700 rupees square feet, and by sharing returns with the landowners.

The company aims to build up to 15,000 low-cost homes over the next 3-4 years across several cities including Mumbai, Delhi and Bangalore.

Demand for homes in India has slumped more than half from a year ago after prices more than doubled and the central bank hiked interest rates to control inflation.

Developers such as the Housing Development and Infrastructure, the Puravankara Projects and the Omaxe have launched less expensive houses to revive cash flows. (ANI)