portion is low-income while the others are middle-income offerings. Prior to 2010, the average number of units offered stood at 3,000. Finding parcels of land at affordable rates is getting increasingly difficult to find especially in the vicinity of metros such as Mumbai, which means going further into the suburbs, which comes with its own set of problems. A buyer would factor the travel time from the home to the workplace.
Next comes approvals, for they take 24 months on an average. “For a developer in this segment, keeping costs low is the key, and longer approval times mean cost escalation,” says Sachin Kulkarni, MD, Vastushodh Projects that has projects in Navi Mumbai, Pune and Kolhapur.
The buyer also faces one challenge: access to finance. The report cites the presence of several housing finance companies who are funding such buyers, but their numbers are few and restricted only to a few markets. The key issue is to get banks to finance such buyers.
“When I began developing my project, I found that buyers were queuing up but only a minuscule number could get a home loan. The others could not, as banks had tailored their scoring mechanism to the high income buyer,” says Raghav Garg, MD, Garg Group that is developing a low-income housing project in Pilkhuwa, located 20 kilometres from Ghaziabad in Uttar Pradesh.
Garg had to persuade the State Bank of India to change its mechanism, which it did. This has now got the housing ministry interested and is exploring on ways to get other banks to come up with a mechanism that takes into account the situation of a low-income borrower.
The other issue is that local governments are not sufficiently sensitised to the need for private sector developers to enter this space. “The first question we were confronted was, why are you developing such houses? It is the job of the state government,” says Garg, about his interaction with the local authorities at the time of applying for approvals. “Ghaziabad, where I am based, has several slums that keep sprouting up, that are then regularised. But I find it difficult