Nano house How to make housing a growth driver
The Financial Express, May 8, 2009, Page 6
How to make housing a growth driver
WITH the real estate market showing no signs of revival, afford- ability has become the most important differentiator in attracting new customers. Developers are making a beeline to construct low-cost housing in the NCR, suburbs of Mumbai and in Tier-II and Tier-III cities.
These apartments are priced less than Rs 10 lakh and the coverage area is below 500 square feet. As the slowdown has hit the luxury and HIG category housing the most, developers are even modifying their pre-approved plans to build small-size apartments to cater to the untapped market. Anecdotal evidence suggests that more than 50 large and medium-size real estate companies have lined up affordable housing projects and many are negotiating with various state governments for land at concessional rates to construct low-cost housing under the PPP model as land price accounts for around 70% of the total project cost.
Taking a leaf out of the Nano’s success, Tata Housing launched the Shubh Griha project at Boisarin Mumbai costing between Rs 3.9 lakh and Rs 6.7 lakh (excluding the registration fee) and offers three sizes.
The company reportedly plans similar projects in Bangalore and Delhi.
This is commendable, as the demand for housing will continue to rise due to urbanisation, demographic change and falling household size.
Goldman Sachs estimates that an additional 140 million people will move to cities by 2020 and average household size is likely to continue to decline, which will push up demand for housing. The Planning Commission estimates that there is a shortfall of 24.71 million dwelling units in the country, out of which 99% is for LIG/EWS housing.
Though the government has introduced a series of sops for affordable housing projects, the bureaucracy needs to be transparent and set up a single-window clearance. Typically, a developer now has to take 56 various approvals and the waiting time can be anywhere between six months and two years, enough to derail a potential project.
Construction cost has to be reduced without compromising on quality and use of prefabricated construction material can reduce cost by almost 40%. Developers need to be transparent on pricing, a soften they do not mention additional charges like parking, external development and power backup.
The Deepak Parekh committee on affordable housing estimates that all eviating the urban housing shortage could potentially raise the rate of growth by at least 1-1.5% and will have a decisive impact on improving the basic quality of life. While the real estate sector was one of the main reasons for the financial market meltdown in the US, low-cost housing in India may just offer the down side protection here.
The Financial Express, May 8, 2009, Page 6
How to make housing a growth driver
WITH the real estate market showing no signs of revival, afford- ability has become the most important differentiator in attracting new customers. Developers are making a beeline to construct low-cost housing in the NCR, suburbs of Mumbai and in Tier-II and Tier-III cities.
These apartments are priced less than Rs 10 lakh and the coverage area is below 500 square feet. As the slowdown has hit the luxury and HIG category housing the most, developers are even modifying their pre-approved plans to build small-size apartments to cater to the untapped market. Anecdotal evidence suggests that more than 50 large and medium-size real estate companies have lined up affordable housing projects and many are negotiating with various state governments for land at concessional rates to construct low-cost housing under the PPP model as land price accounts for around 70% of the total project cost.
Taking a leaf out of the Nano’s success, Tata Housing launched the Shubh Griha project at Boisarin Mumbai costing between Rs 3.9 lakh and Rs 6.7 lakh (excluding the registration fee) and offers three sizes.
The company reportedly plans similar projects in Bangalore and Delhi.
This is commendable, as the demand for housing will continue to rise due to urbanisation, demographic change and falling household size.
Goldman Sachs estimates that an additional 140 million people will move to cities by 2020 and average household size is likely to continue to decline, which will push up demand for housing. The Planning Commission estimates that there is a shortfall of 24.71 million dwelling units in the country, out of which 99% is for LIG/EWS housing.
Though the government has introduced a series of sops for affordable housing projects, the bureaucracy needs to be transparent and set up a single-window clearance. Typically, a developer now has to take 56 various approvals and the waiting time can be anywhere between six months and two years, enough to derail a potential project.
Construction cost has to be reduced without compromising on quality and use of prefabricated construction material can reduce cost by almost 40%. Developers need to be transparent on pricing, a soften they do not mention additional charges like parking, external development and power backup.
The Deepak Parekh committee on affordable housing estimates that all eviating the urban housing shortage could potentially raise the rate of growth by at least 1-1.5% and will have a decisive impact on improving the basic quality of life. While the real estate sector was one of the main reasons for the financial market meltdown in the US, low-cost housing in India may just offer the down side protection here.
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1 comment:
Wonderful details on how to make housing a growth driver. Really detailed and fairly good tips. Cheers
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