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Neha Bhatia
Affordable housing, in the current scenario, has become the buzzword in India’s real estate sector. Almost every developer is talking of getting into this segment that involves putting up houses for the masses. Although developers are reintroducing one-bedroom apartments and, in the current falling interest rate scenario, buyers are making a comeback, the real issues related to affordable housing still need to be addressed. In the recently held The Economic Times Realty Convention 2009, panelists from all across the sector discussed concerns that come in the way of affordable housing.
Giving a broad perspective about the whole concept of affordable housing, Amit Mookim from KPMG explained, “When we look at the entire gamut of affordable housing there are around five stakeholders. There is the government and public agencies, developers who are the key to making this happen, lenders who finance the consumers and the consumer who has very specific needs. He/she has specific choices on where to live, what amenities he/she wants, what kind of infrastructure, health, sanitation, education, etc., is provided there. Fifth and not the least important is the investor who funds a lot of these activities. For this model to succeed all these factors must be taken care of and it should be a win-win situation for all.” To this Anshuman Magazine, chairman and managing director, CBRE India added, “What is affordable in Mumbai may be a luxury in Hyderabad. The ticket size is the best criteria and should be kept in mind always.” Talking about the viability of affordable housing projects, Rajiv Talwar, executive director, DLF Ltd shared, “Fortune lies at the bottom of the pyramid; there will be no fortune if there is no profit. A project is not viable if it doesn’t give a return. What the government is trying to look for is lesser returns through greater volume. If the volumes are large then the lesser profit margin will make up for it. There is a need to empower the borrower and the milestone that should be tried and achieved is to ensure that the EMI of the borrower is less than the rent paid for similar housing. Also as a publicprivate partner, the biggest role of the government is to keep the land prices in check. It should aim at rejuvenating the supply side of the land. Industries can be shifted to the periphery so that land can be used for residential purposes. We went for industrial development in the first five decades after becoming independent but now there is a need to adopt the residential model.” To this PK Mohanty, joint secretary-JNNURM-Ministry of Urban Development & Poverty Alleviation agreed, “Need has arisen to add people to the public-private partnership. As such it is the people for whom this is being done. Even government agrees that there has to be a convincing business proposition. That is the reason we are coming up with developer friendly policies.”
Other than bringing the cost down it is the delivery option that is critical in affordable housing. On this Navin M Raheja, managing director, Raheja Developers Ltd. shared, “Implementation and facilitation of policies is mandatory. There is a need for separate single window clearance system to ease out the whole process for the developer. Also a model code needs to be framed for this sector.” Adding to this, Talwar emphasized, “Time taken for approvals is too long. We don’t want the government to deregulate the approvals or make them more transparent but the idea is to save time. By saving time we can land up any home or any project to the eventual buyer at a cheaper rate. Nobody minds paying a higher cost for the approvals, but the time taken has a greater meaning when it comes to the costs.” Addressing the issue of cost management in this sector, Mookim said, “One of the key challenges in actually meeting the demand for affordable houses is going to be cost management. This will be a function of how the developers institutionalize this process; How they think big, beyond a 100 or 200 apartments to actually a 1000 or 2000 apartments; How they leverage global best practices from the countries where a lot of these large projects have taken place; How they think beyond real estate and include infrastructure as an important element; How they leverage this business model and gain economies of scale to save cost.”
The panelists mentioned efficiency, delivery by suppliers, infrastructure and reforming the paradigm of planning as some of the challenges faced by the sector. The positives as seen by the panelists were; tremendous emphasis on affordable housing, awareness and supply of land in peripheral areas and focus on large volumes.
Sanjay Verma, executive managing director - South Asia, Cushman & Wakefield concluded, “There is a dire need to invest time and energy in increasing the efficiency of output and also the developers should look out for alternative construction technologies. Also a hand-shake approach between the developers and the government is essential.”
Courtesy:- TOI dt:- 20/11/2009
