Sunday, 21 February 2016

The future of affordable housing in India

The concept of Affordable housing is very generic and has several implied meanings in different contexts. Affordable Housing is interlinked to a number of factors like the income level, the kind of comfort, facilities, standard of living and amenities be offered in that price range. In addition to all these factors, another parameter that plays a vital role while the sale of affordable housing is the target customer for the same. For a low level income category, affordable housing will be a dwelling that ranges between 7 – 12 lakhs whereas the middle income category can look up to affording a flat within a bracket of 25 – 30 lakhs. Thus first the demand and the sale of such houses has to be determined by keeping all the above factors in mind and then only we will be able to take some positive actions to make it a future in India. 

The fact is that affordable housing is the much needed concept that needs to be in full swing to bring back the realty sector on track. The market is flooded with the high – end luxury housing but the segment of affordable housing has a gigantic shortage in some states, particularly in big cities. With the very high land and the construction cost followed by the approvals from around 35-40 departments required to pass a project, the developers who focus on affordable housing are facing hurdles in achieving the long – standing dream of affordable housing.  

We at RE/MAX India believe that due to the sudden fall in the demand in 20013-14, where the market had become very competitive and the private developers were just concentrating on the mid-income and high-end housing, shifting to affordable housing segment has provided an appropriate option to diversify risks to the developers. Also, due to lack of land parcel within the city limits has pushed the developers to aggregate land at suburban location where a high-end project might not be successful, since these land parcels have lower cost of acquisition. 

We also believe that a strong mission is required between central, state government and big cities. Work needs to begin on this said mission which has four distinct components/wings - slum redevelopment; affordable housing through interest subvention; rental housing for migrants; housing for urban destitute and homeless. In addition to this, slum redevelopment will require experts on PPP and finance which needs to be integrated in the finance division that needs to be part of mission.

Further, all the states need to sign MOU agreeing for mandatory conditions like development of slums through PPP mode , granting additional FSI/TDR for slums and affordable housing projects ,single window clearance for building and lay out ,permission on pre-approved lay out and building design for EWS/LIG housing  et al. These steps are likely to give the much required additional push towards this area. A lot of studies have shown that there is momentous demand for affordable homes but supply is limited, even as developers begin to implement business models around this.

Affordable housing is expected not only to improve the basic quality of life but also make a good economic sense. Affordable housing is attracting a lot of buyers and investors and the realty majors who previously focused only on mid-income and high-end housing projects are seriously looking at building up their presence in affordable housing as well.

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