PUNE: Affordable housing is a term we use for the residential units in India’s urban areas, which are affordably priced, with respect to the households that fall within a specific limited income range. There is no single set of parameters to define what an affordable housing unit should cost in India. This is because the pricing and feasibility of the developers of affordable housing, is a function of the city, the location within the city, the type of project being built and also the construction technology employed.
In India, it is appropriate to judge the affordability of a home, on three broad parameters – the monthly income of the prospective buyers from the target segment, the size of the home and of course, its price. There is another element that should be mentioned, namely the target clientele itself. We tend to look at the word ‘affordable’ solely, in terms of the LIG (lower income group) segment. For this segment, affordable housing would mean 200-300 sq ft dwellings, priced at between Rs 7-12 lakhs.
What about the people who earn more than the average factory labourer but still cannot afford to buy a decent one-BHK flat of 300-450 sq ft, within 10-15 kms from their workplaces? They too need affordable housing – housing appropriately priced for the middle-class. The home buyers in this segment can afford to buy flats, in the price range of Rs 30-35 lakhs via home loans.
Obviously, they expect a certain standard of living, comforts and facilities for this expense. However, such flats are hard to come by in our larger cities. This is the case even in Pune. Today, around 30 per cent of India’s population lives and works in the urban areas. This means that they occupy less than two per cent of the land available in the country. If we zoom in on Maharashtra, it emerges that close to 60 per cent of the overall population lives in the urban locations. Distressingly, a closer look at a city like Mumbai reveals that over 50 per cent of its citizens live in the slums. Mumbai’s slums occupy less than four per cent of the land available in the city. Obviously, the affordable housing quotient has gone very wrong in this prosperous neighbouring city of Pune. However, the problem is larger than just one city, which continues to get negative publicity in the press, only because of its exorbitantly high property rates and enormous annual inward migration.
Despite everything being said on the matter, the shortage of affordable housing in India, is getting worse instead of better. The country’s urban population of 285 million has multiplied itself by five, over the last half century. It is projected that it will continue to increase at this fast pace and that 50 per cent of all Indians, will be living in the urban areas, by the end of the next three decades. So, if the shortage of housing for the lower income segment stands at 25 million today and there is no increase in the pace of supply of affordable housing launches, what will this figure look like in 30 years?
Let us look at the situation from a real estate market point of view. There is, in fact, a gigantic market for affordable housing in India. Currently, it is valued at anything between Rs 5-10 trillion. What is really being done to address this huge market, especially, the one constituted by the ever-growing middle class? There are next to no government incentives for the projects with flats in the Rs 30-35 lakhs bracket.
While the answer to this question, in Mumbai, seem to lie in the small projects on the far outskirts of the city, Pune presents a far more encouraging picture. The developers of township properties in Pune have now begun addressing this market segment, with an internationally-inspired property development model, called the integrated townships. This model is based on the maximum value for the money to the buyers, based on the high-grade common infrastructure and shared facilities, in more cost-effective yet, progressive areas like the Pimpri Chinchwad Municipal Corporation.