AFFORDABLE HOUSING

Market Scenario in India

Presented by:
Mr. Ashish Jindal
Regional Director (North)
Knight Frank India Pvt. Ltd
Introduction to Affordable Housing

• Housing for the masses

• Comfortable living
• Location proximity

• Affordability is quantified by
• Household income
• Price of the product

• Affordability does not compromise on

• Quality of construction
• Provisioning of socio – economic infrastructure

• Recent shift in focus towards affordable housing

 Growth Scenario of Indian Economy

• GDP growth surpassing target rates

• Decline in population below poverty line

 Real Estate Industry Evolution

15 YEARS AGO NOW

Unorganized sector Organized sector

Controlled development by
Private sector participation
development authority

Traditional construction Modern Mechanized

techniques construction Techniques

Funding through
Multiple funding Options
unorganized sector
Loan approval – Loan processing in a
quarterly execution matter of days
Property purchase at Property owners’ age – 27
fag end of career and above
Demand Supply Dynamics

• Short Supply of residential dwellings

• Supply shortfall existing since post independence
• In 2005 estimated demand is 209.5 million, supply is 189.7 Million
• Demand – Supply gap is narrowing
Demand Supply Dynamics – cont’d

• Low supply of housing for low income earners

• As per 11th 5 year plan
- Shortage of 24.71 million dwellings
- Close to 99 % of shortage in EWS & LIG segment

Category Housing shortage (Mn)

EWS 21.78
LIG 2.89
MIG + HIG 0.04
Total 24.71
Supply way away from Reality- Bangalore

Price Related Income

Price Supply Split
take home (Lakhs)
< 50 lk 28% 10-12
50-80 lk 29% 18-21
Income Level Per Capita (Targeted)
80 lk - 1 cr 4% 21-25
1 cr -2 cr 29% 45-50
2cr - 3cr 2% 60-70
> 3 cr 8% 80-90

Rs. 5,50,000

This wide gap is seen existing

across most urban cities in India WIDE GAP

Rs. 79,460 Actual Per Capita Income

Reversal of growth factors

THEN NOW

Continuous increase in GDP Decline in GDP growth

rate
Increase in income levels

2007 & beyond

Income level stagnation/
2003

Lowering of home loan risk of layoffs

interest rates
High lending rate
Affordable property prices
Unaffordable property
High market sentiments prices

Low market sentiments

Opportunities for Affordable Housing in India

• Restructuring of the housing sector

• Re-focusing product to real end user demand

• Catering to strong domestic demand

• Real estate as a widely linked sector

• linkages with 200 industries
• Multiplier effect on growth

• Growing urban population

• Projected urban population to 533 million by 2025
Issues relating to Affordable Housing

• Lack of regulatory mechanism

•High cost of land

• Stringent land acquisition process

• Double taxation system – high transaction cost

• Constraining density norms

Suggestions

• Speedy approvals of housing projects

• Provisioning of additional FSI

• Improving connectivity to suburbs

• Rationalization of transaction cost

• Non scarcity of developed land

• Creation of Special Residential Zones (SRZ)

• Value engineering in construction

• Private Public Participation (PPP model)

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