Affordable housing is need of the hour. If we look at the current scenario, there is a huge demand for affordable Housing Projects in Mumbai city. India, like most major emerging economies, has been witnessing accelerating population shift from rural to urban areas. In fact, as per census 2011, for the first time since India’s independence, the absolute increase in population was more in urban areas than in rural areas. This shift is creating a larger requirement for housing and its mounting pressure on the existing infrastructure. If we do not address this, it will further aggravate the explosion of unplanned and unsustainable city.
In the past one year, looking at the massive demand, developers have modified their projects into affordable housing segment. And now with the implementation of RERA, real estate industry is moving into a right direction. Here, land acquisition is the main but challenging component and to simplify its process, bodies like NAREDCO and MCHI along with Government are working towards it. To further support ‘Affordable Housing’ segment, the Finance Minister recently announced ‘Infrastructure’ status to it, which is likely to result in increased participation from private players. This step is expected to act as a catalyst to meet the objectives of ‘Housing for All’ by 2022.
The government has increased the allocation under the PMAY scheme which will encourage homebuyers to purchase affordable houses. To make affordable housing more attractive, instead of built up area, the carpet area of 30 and 60 sq meter will be counted. This could be a game-changing step for developers who already have a good presence in the affordable segment. The relaxation on long term capital gains, joint development agreements, tax rebates for builders will help reduce their tax liability. This might help spur consumption and also have a positive impact on demand for housing. Government has now made it easier to buy land by providing offers to avail their own land at cheaper rates for affordable housing segment. There is a huge demand right now for this segment and supply is comparatively less especially in the city of Mumbai. At present, buying a house in city with less than 1 crore is not possible, however, affordable housing projects will change the situation.
But even with the substantial requirement, there are many factors which are slowing down the growth of affordable housing in the city. Land and construction price is high. There is a premier on stamp duty and TDR, also until and unless the price of ready reckoner rate does not decrease, housing prices will continue to be on higher side. Thus, affordable housing is only possible on the outskirts of any metropolitan city at present. Many lenders do not want to fund affordable housing projects due to associated social infrastructure (like hospital, education, roads, etc) cost involved. The lack of affordable and adequately sized land parcels in inner urban localities has furthermore driven the development of Affordable Housing to urban peripheries. This often poses a challenge to the Affordable Housing customer, who requires efficient connectivity to areas of work in city.
Globally, countries like Hong Kong, Singapore have made provisions for affordable housing and it’s a huge success. Like small and crowded localities have been strategically improved and aided by an efficient public transport service. We too need to create well-planned and sustainable Mumbai city while empowering our ecosystem which will sufficiently meet housing needs of the urban poor and middle class population. All we need is to widespread Affordable Housing segment with only one mission – Housing for All.
The author is CMD of Nahar Group
Publication / Source: afternoondc.in