A business-friendly strategy, is the only way to create affordable housing

While affordable housing has been widely acknowledged as the need of the hour to solve India’s housing shortage, we look at what is being done in this segment and the further measures that are necessary to achieve the goal of ‘Housing for All by 2022’

Cost-effective housing is a key problem in all developing countries but India presents a remarkable case study. While India’s constantly expanding population is the bedrock of its economic promise, it is also the source of many issues, including the housing deficit. The country’s urban population is likely to reach 600 million by the year 2030. There is a huge existing and future requirement for affordable homes.

So far, the attempts of the government to breach this gap, have not been very successful. However, in all fairness, addressing the massive deficit of budget homes in India is a herculean task, which cannot be the sole responsibility of the government. The only real option is to rope in the private sector considering the deficit in this segment, currently hovers between 18-20 million units.

The country’s residential developers have definitely woken up to the fact that affordable housing is where the greatest demand currently is – not only from end-users but even from investors. What they are doing about creating the required inventory, depends a lot on which city and in which areas they operate in and whether or not they have the requisite technical knowledge and bandwidth for such housing.


Factors that will determine the success of affordable housing

Obviously, developers who have been concentrating their efforts mostly on the cheaper outskirts of cities will have such knowledge, as such areas primarily see demand for affordable housing. Developers who have, so far, been concentrating more on middle-income and premium housing, have a greater challenge on their hands.

See also: Here’s why infra status to affordable housing may not mean cheaper homes in the metros

In the first place, they often lack the expertise for successfully carrying out budget housing projects. Such expertise must encompass the ability to balance residential spaces with a good saturation of common amenities and facilities. They must also have a good working relationship with the municipal authorities who handle affordable housing, to get expedited clearances for their projects and access to land parcels in the right locations.

Simply reinventing mid-income housing into budget housing, cannot solve the problem in most cases, as the project may be in a location which commands higher land rates. This means that the buyer ends up paying premium location charges, which is not feasible for budget housing. Also, some developers simply do not want to be known for affordable housing projects because they have worked hard to build up a ‘premium’ label for their brand.


Why slum rehabilitation may not be the answer to affordable housing needs

Meanwhile, slum rehabilitation or SRA projects are an extremely tedious and complicated affair, which is beyond the scope of many players, who are not used to this route of development. It involves obtaining the consent and willingness of the existing residents of such areas and overcoming various hindrances from local politicians, who have their own interests in unregulated housing such as slums and tenements.

Also, even if all the consents are obtained and hindrances overcome, there is still the question of relocating the existing residents until the new project is complete. All these are some of the reasons why there is probably no foreseeable solution to recreating areas like Dharavi in Mumbai into organised affordable housing locations.


What can the government do?

One solution to boost the available supply of affordable housing, which requires determined government intervention, is the release of land held by various government agencies such as the Railways. There are huge land parcels available in areas where affordable housing is needed the most.

The Government can and must consider this option, if it intends to realise its aim to provide ‘Housing for All by 2022’. Another means available, is the creation of Special Residential Zones on the lines of SEZs, with all the implied benefits and tax breaks for both, developers and buyers of housing in such zones.

(The writer is chairman, Pharande Spaces)


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