The Rise Of Affordable Housing In India
The growing population in India has led to many problems including land shortage, housing shortage, and congested transit. According to the census in 2011 the country had a population of 1,210.98 million, out of which, 377.10 million or nearly 31.16 per cent lived in the urban areas. The population according to this census is also estimated to grow almost 600 million by 2030, this along with the slums already overflowing with families has led to the need for space in affordable pricing. Affordable housing refers to housing units that are reasonably priced and can be owned by that section of the society who pays more than 30 percent of their income for housing and are considered cost burdened.
The scheme of affordable housing is trying to rope in private sector participation since the creation of such housing stock on mere efforts of the government would be insufficient to address the shortage. Affordable housing includes social rented, affordable rented and intermediate housing, provided to specified eligible households whose needs are not met by the market. For example, these could be families who have difficulty affording necessities such as food, clothing, transportation and medical care. The property used for such housing could be a new-build property or a private sector property that has been purchased for use as an affordable home.
Affordable housing has become a key issue especially in developing nations where a majority of the population isn't able to buy houses at the market price. Rehabilitation of slum dwellers through public-private partnership projects, promotion of affordable housing for weaker sections, and promotion of housing for urban poor are considered to be the elements of this initiative.
According to a recent report by a real estate advisory, the affordable housing sector has seen a massive surge of close to 100 per cent in new launches in the first half of 2016 (H1 2016), as against the same time last year. The total number of affordable housing units (up to Rs 70 lakh for Mumbai and Delhi; Rs 20 lakh to Rs 50 lakh for rest of India) launched in H1 2016, in the top eight cities, were recorded at over 17,000 units; while the total units launched in these locations were recorded at 60,000 in H1 2016, registering an increase of nearly 17 per cent year-on-year. In terms of volume, however, mid-ranged housing saw the highest number of launches at 36,267 units in key market recording 10 per cent increase in H1 2016 as compared to same time last year. High- end residential units saw a decline in the total number of units launched in the H1 2016 period which had been lower by 29 per cent in the period.
Rendering to the industry assessments, the housing shortage in India has touched 18.78 million units. As per the latest Economic Survey, there is a shortage of nearly 20 million homes in India. Hence, as much as the demand side should be taken into consideration the supply side cannot be filled by government players alone. Private players have to come in and support the program.
Currently, there are just three cities Mumbai, Ahmedabad, and Indore which have more than 20 projects each providing housing below Rs 10 lakh. There is already an increased interest among the developers to lay out affordable housing. To fulfil the target of providing shelter to all each developer needs to reserve 20 per cent of the projects as affordable housing component. The developers, private and public players, also face a lot of challenges like high cost of urban land, a very extensive approval process, and availability of land. It has to also be kept in mind that the longer it takes to complete a project, the costs involved increase which in turn results in an increase of the project. This reduces profitability for affordable housing developers who operate on thin margins. Finance and lack of access are one of the bigger challenges for developers as banks are not very keen on giving money to the real estate sector given its challenges. To help overcome these challenges the government has implemented various schemes and policies. Some of these policies include HUPA, HUDCO and NHB at the center and various authorities at the state level.
As increased migration continues in urban areas developers will have to add at least two million new homes per year to give every citizen a roof over his/her head. Over 20 projects are in progress at places like Karjat, Vasind, Palghar and Boisar in Mumbai along with Chakanand, Shikrapur in Pune. It is now time for affordable housing to become streamlined and for the government and private sector to work together to unlock the potential of this enormous market and achieve the promise of a decent house for every Indian.
Pakshal Sanghvi, Director, Sanghvi Realty is a young and dynamic entrepreneur. His key role in the organisation is to facilitate the core nature of their business dealing with acquisitions, development, construction and management of commercial spaces within the real estate sector.