Affordable houses to provide Rs 500,000cr biz opportunity

The affordable housing segment will offer business opportunities worth over Rs 500,000 crore as India requires more than 10 million houses to be built by 2013-14.     

According to a report prepared by property consultant Knight Frank on Public-Private-Partnership model on housing in India, an estimated 11.84 million dwelling units are required to be built in India by the end of 2013-14 across all income segments in 37 cities.     

The need from the economically weaker section (EWS, lower income group (LIG) and lower mid income group (MIG) is nearly 90 per cent of the total housing requirement, it said.     

"The cumulative task of delivering over 10 million units in affordable housing category in top 37 cities of the country quantifies to a business opportunity in excess of Rs 500,000 crore," the report, prepared for realty body NAREDCO, added.     

Commenting on the potential of the segment, the report said though the margins realised from affordable homes are comparatively lesser, the segment offers an opportunity to exploit volume of transactions to derive higher profits.     

The consultant pointed out that the government alone would not be able to meet the pan-India housing requirement, "thus venturing into a joint model with the government can be a practical solution".     

The synergies could be utilised towards achieving the central government's objective of 'housing for all' and making India a slum-free nation, the report said.

"A PPP model entails forging strong partnership between public and private sectors for accelerated growth in the housing sector. It will address the issues of adequate fund flow in housing, institutional support...," the Knight Frank report said.

Elaborating on the housing requirement, the consultant said the demand for about 8.08 million units exist in the EWS and the LIG category households with an annual income of less than Rs 3 lakh.

Among the 37 most populated cities, the top 10 cities, including Delhi, Mumbai, Bangalore, Kolkata, Chennai and Pune, constitute about 62 per cent of the urban housing shortfall.

According to the consultant, major share of housing shortfall is concentrated in Tier I cities and the requirement is estimated at 26,013 hectares.

"From a developers' perspective, acquiring such large (land) banks might prove to be difficult. Thus the role of the government and the regional authorities in facilitating land acquisitions become an important aspect to meet the housing shortfall till 2013-14," it added.

Knight Frank observed that the private developers' primary focus area has typically been the upper MIG and the high income group (HIG) segment.

"In case of an upper MIG or a HIG unit, the property commands a premium in terms of the price of the product, hence facilitating the developer to derive higher profits out of a development venture," it added.