Says the national director and head of operations – strategic consulting, JLL India
The recently-announced Union Budget 2017-18 has yet again emphasised the importance of housing, and has accorded infrastructure status to this sector. It is important to attract the attention of all stakeholders to this sector, particularly those who influence supply – developers and banks. Given the benefits offered in the budget, the clearer definition of affordable housing in terms of area, relaxation of construction timelines for affordable housing projects, and tax incentives, it is evident that India is moving towards significantly reducing its share of homeless people.
The traditional factors influencing housing demand keep fluctuating due to policy interventions; yet, consumers keep investing in real estate. This is evidenced by the fact that housing sales velocity has not dropped significantly anywhere in India due the various policy reforms. Moreover, today’s market primarily consists of buyers (as much as 80%) who depend on loans for financing their housing needs.
Of all the policy initiatives, the Housing for All (Pradhan Mantri Awas Yojana) and the Smart Cities Mission are two major flagship policies that have affected the demand and supply trends of residential real estate, and have a huge impact on addressing the issues of informal housing/housing for the urban poor. The recent Real Estate Regulatory Act does not concentrate on incentives to promote informal housing, though it increases transparency in the formal residential market.
The Housing for All and smart cities missions, through convergence, use the benefits given to each other and also compensate for shortcomings by leveraging their advantages. (HT Photo)
Affordable housing shortage continues to be a major concern in the country today, and can be correlated with the rate of urbanisation taking place. According to the Census of India 2011, India’s urban population increased to 377 million, reflecting the rise in urbanisation from 27.8% to 31.2% between 2001 and 2011. This rate of urbanisation has led to many issues such as land shortage, housing shortfall, severe pressure on available infrastructure, transportation deficits and stress on basic amenities like water, sanitation and health care.
The Housing for All and smart cities missions, through convergence, use the benefits given to each other and also compensate for shortcomings by leveraging their advantages. While Housing for All concentrates on funding and incentives for developers and buyers, the Smart Cities mission focuses on leveraging land availability, implementation under single entity SPVs (special purpose vehicles), and strengthening basic infrastructure facilities.
As part of the smart city initiatives, some Indian cities have planned convergence with the Housing for All scheme to address the informal housing sector. Some of these initiatives would include housing for economically weaker sections or affordable housing, slum redevelopment, rental housing, working women’s hostels, shelters for the homeless, etc as part of the smart city plan. All these would be developed through the PPP model with the involvement of private developers. This has been successfully adopted in Bhubaneswar Smart City, which ranked number 1 in the Smart Cities Challenge competition by the ministry of urban development. There is a huge opportunity for private developers to get involved in the development of housing for the informal sector.