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House For Mr India: Affordable Housing Iis Not About Box-Sized Units In Far-Flung Places

By ugesh sarkar, Section Real Estate
Posted on Wed Jul 01, 2009 at 10:56:00 PM EST

but homes within the budget of 60% of urban families.

IT IS the latest fad among real estate companies. Builders, big and small, look at affordable housing as the saviour that would pull them out of the abyss.

Leading developers like DLF, Parsvnath, Unitech, Tatas, Puravankara and Akruti are banking on the volumes this segment promises to generate.

The 11th Five-Year Plan estimate of a shortage of 24.7 million units in urban housing, mainly for economically weaker sections (EWS) and the lower income group (LIG) has added to their excitement and expectations.

But while everyone's talking of affordable housing, no one's sure what it exactly means and what's in store for it. What is affordable in Mumbai may not be affordable in a tier II city.
There is no official definition provided for it by either the government or a housing agency.

Says Crisil Research head Sudhir Nair, "We believe affordable housing is a dwelling unit that can be purchased by at least 60 per cent of the families within a city. Here, we also assume that the bottom 40 per cent (the low income category) would be unable to afford a house, whereas the top 20 per cent (the high income category) would have the funds to buy any house, anywhere in the city."

HDFC chairman Deepak Parekh's letter in the company's annual report says the real agenda for affordable housing has still not been brought to the table.

"Affordable housing is not about box-sized, budget homes in far-flung places where there is no connectivity to work places and little surrounding infrastructure. Affordable housing has to be able to cut across all income segments and has to make economic sense in terms of proximity to the work place. The agenda for affordable housing requires a combined public private collaboration and a strong political will to enforce change," Parekh adds.
There are also concerns that funds raised for affordable housing may not be utilised for the projects they are meant for.

Source: mydigitalfc.com House for Mr India

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Also, most of these projects will be in suburban areas, because of high land prices in cities. Mass housing in the far-flung areas would also not address the needs of the swelling lower middle class.

A Crisil Research report says affordable housing at attractive locations (near CBD areas) is not possible because of the high land prices. The mid-income category has the Hobson's choice of purchasing a house in the suburbs or on the outskirts.

To make living in the suburbs and commuting to city for work a viable option, state governments and developers must collaborate to build the necessary infrastructure.

"For developers, an important challenge is to generate an awareness among policy makers on the vitality of the sector. In fact, it should not be seen in isolation. Housing construction should be classified as urban infrastructure. When a residential township is developed, there is a simultaneous development of roads, sewage, hospitals and educational institutions," K P Singh, chairman of DLF group had told FC Estate.

"The year 2009 will be the year of affordable housing. This will be an important focus area for DLF."

Developers stress that the government should provide a greater impetus to those involved in the segment.

"Specific tax concessions should be given to those involved in affordable homes, by which I mean homes costing up to Rs 20 lakh.," says Ravi Ramu, finance director of Bangalore-based Puravankara Projects.

"The industry believes that the central government has the potential to play the role of the steam engine based on the fact that real estate sector alone can add to the GDP by 1-1.5% if efforts are made to reduce the shortage of urban housing while moving towards a slum-free urban India. We are asking for financial incentives for encouraging affordable mass housing in 300- 600 sq ft and up to 1,000 sq ft by providing subsidy in interest payable by home buyer," says Santosh Kumar Rungta, president of Confederation of Real Estate Developers Associations of India (Credai).

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