Global real estate consultant Cushman & Wakefield in a report released in conjunction with CREDAI, at NATCON 2015 held in Istanbul, Turkey has said that it expects a strong demand in the top seven cities – Delhi-NCR, Mumbai (MMR), Bengaluru, Chennai, Hyderabad, Kolkata and Pune – that will drive the private sector’s participation in creating affordable housing.
It further added that the urban affordable housing segment currently presents a $11.8 billion (INR 75,800 crore) opportunity for the private sector.
“Urban affordable housing has long been neglected in India due to various reasons such as high land prices, delays in getting approvals and low margins in the segment. Now with renewed focus from government, we expect this segment to gather momentum going forward,” says Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield.
While overall new launches rose a tepid 14% in the April-June quarter, compared to the previous quarter, developers launched 7,000 affordable units in the latest quarter, an increase of 320% on a quarter-on-quarter basis. Around 60% of the total units were launched in the National Capital Region alone, comprising Delhi, Gurgaon, Noida and Faridabad, during the second quarter.
“The residential market can offer a multitude of opportunities if innovative housing models that would address challenges of specific target segments are adopted. The Affordable housing segment that is now backed by a strong mandate of the central government currently witnesses a demand-supply mismatch and it is imperative that public-private-partnerships be given an impetus to achieve desired scale,” says Getamber Anand, President, CREDAI National.
The report empasised on the need to promote private sector involvement that would play a significant role in bridging the current deficit of low-cost housing in urban areas to fulfill the need for low-cost housing.
Till now, private players have shied away from this segment, due to low margins. Incentivising the sector by making land available, reducing raw material prices, providing additional Floor space index (FSI) for such developments etc. are bound to give a thrust to development of low cost housing units.
Further, by providing tax exemptions and thereby reducing developmental costs, the government would be able to lure private developers. Ideally, the public sector should look at aggregating land for project, whilst the private sector should focus on the construction, financing the project, etc. Additionally, private sector participation, particularly in a public private partnership (PPP) model would also enable timely approvals.