Are they affordable enough?

Recent reports suggest that India will overtake China in terms of population by 2050. However, the shortage of urban housing projects is cause for concern. If the current migration of rural population to urban centres continues, it will touch 576 million by 2030 from the current 328 million. The Planning Commission in its report in 2007 had pointed to 24.71 million urban housing shortages, and this is expected to touch 26.5 million by 2012.

Leading real estate firm Knight Frank released a research paper on ‘Affordable Housing in India’, stating that the segment will have a potential market size of Rs 300,000 crore in India by 2011. The affordable housing segment of the real estate industry is expected to see a requirement of over two million units by 2011.

In the recent past, developers have realised that a majority of the demand comes from affordable housing, and that they cannot sustain on high-end projects alone. So, now they are adopting a mix of affordable housing and high-end projects.

Boost for developers

Private developers and cooperative societies should be encouraged further with tax benefits and other incentives to make housing available to the economically poor at nominal rates. Government bodies should seek support from NGOs in planning housing and resettlement.

Point out Swapna and Hemant, company secretaries of a leading real estate company in Bangalore, think that housing the poor is an urgent and important requirement. In order to meet that objective, there is need for accurate planning and mainstreaming of the urban poor into the economic growth story.

Value housing

Pawan and Beena who work as architects with a Bangalore based company for an affordable housing project, think that having a house is still a dream for several families, and affordable housing will transform this dream into a reality without compromising on quality. Builders, in order to bring down the prices, are aiming at perfection and improving the technicalities to reduce costs, points out Pawan.

Builders are also bringing down prices by restricting the size of residential units and introduction of modern technology. Builders are not the only ones latching onto the bandwagon; affordable housing is now catching the eyes of dedicated real estate funds and private equity firms that are chasing opportunities in this emerging space.

During boom time, housing sizes increased as did opportunity costs. These have now shrunk to accommodate the shrinking wallet of buyers and with the scaling down of specifications.

For developing a project within the city and to bring down prices, what the builders find difficult is the availability of developed land. Also, it would help if the government devises a single window system for all clearances.  

This saves time and money for the builders. Taxes and levies on affordable homes will have to be brought down, so that ultimately the buyers get the benefit and prices are
brought down.

Transport infrastructure gap is another important cause for the bottleneck in having affordable housing.

Sharath, a property lawyer, thinks correction and ‘affordable’ housing in India is not in fact as affordable as it is made out to be. Flats are priced high, and therefore it is a misnomer, he explains.

Affordable housing, in that sense, is not exactly low cost housing. Contractor Sathish Kumar, for instance, points out that affordable housing does not exactly mean the bare minimum.  

Most construction firms and builders think it provides all basic amenities including
community facilities and services, parking and play areas.

Whenever there is a need for power back-up, they provide that too apart from other basics. Some affordable housing projects provide facilities like gyms, swimming pools and multi-purpose jogging tracks. However, it does not appear that the economically weaker sections would actually need all these facilities. Instead, all they probably need is a basic home of their own.

Even though India has successfully come out of the economic crisis with less damage unlike the European countries, much has to be done to protect the lower and middle income groups, and this can be done only by providing fiscal measures, including reduction of stamp duty rates, registration charges and income tax benefits for developers engaged in low-cost housing, which shall keep them interested in low cost housing.