Making affordable housing workable

Making affordable housing workable
The Hindu Business Line, September 6, 2009, Page 15

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At the ‘Housing for All’ seminar, the emphasis was on involving the private and cooperative sectors in developing housing with land made available by the public sector.
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— Bijoy Ghosh

A focussed policy is needed to lower cost of housing and encourage public-private partnership to bring land available with the public sector for development by the private sector, said Mr D. P. Yadav, Managing Director, Tamil Nadu Housing Board.

Addressing a seminar on ‘Housing for all’ organised by the Confederation of Indian Industry – Chennai Zone and the State chapter of Confederation of Real Estate Developers Association of India (CREDAI), he said State governments need a policy approach to address the housing needs of the economically weaker sections and the low-income groups. Some States such as Gujarat, Karnataka and Punjab have moved towards making available land to the building industry to set up affordable housing.

Transport bottleneck

Transport infrastructure gap was another important cause for the bottleneck in supply of affordable housing, he felt. In the 1960s and 1970s, the TNHB had developed suburban areas which were now a part of the city. But areas more to the periphery could not be developed because transport was not available for people to move efficiently at affordable cost. Even now the city could grow and affordable housing supply increased if adequate transport was available to tap the land in the peripheries.

Mr Surjit Chaudhary, Secretary, Housing and Urban Development, Tamil Nadu, said that it was ironic that developers focussed on the creamy layer of the market while 98 per cent of the market demand was in the middle- and low-income groups, which need affordable housing. Builders need to shift their focus to the segment where there is demand.

Mr Vikram Kapur, Member Secretary, Chennai Metropolitan Development Authority, said that the Centre’s National Urban Housing and Habitat Policy 2007 highlights that 99 per cent of the housing shortage was in the economically weaker and low income segments.

The shortage of 26 million residential units would involve an investment of over Rs 3.61 lakh crore to bridge. Chennai alone would need over 1.23 million dwelling units, but the current supply was about a fifth of that.

The Centre has provided for subsidies under the JNNURM for increasing supply of housing to the economically weaker and low income segments. The State Government has provided for additional built-up space for builders to cater to these segments.

If land could be made available by the public sector, then the private and cooperative sectors could be involved in developing housing. Some element of cross subsidy could also be enabled by allowing middle income housing and commercial development and make the project attractive to the builders.

Builders’ view

According to Mr R. Kumar, Managing Director, Navin Housing and Properties (P) Ltd, the options available for builders to bring down prices was by cutting down on the size of residential units and introducing modern technology. But significant reductions could be achieved if land cost could be controlled, the time taken to obtain statutory clearances reduced and taxes and levies brought down for the benefit of the buyers.

For a project within city limits, these costs alone worked out to over Rs 8,100 a sq.ft and in the suburbs to about Rs 3,800. Under these conditions, housing supply could never be affordable anywhere in the vicinity of the city.

Mr Prakash Challa, President, CREDAI – Tamil Nadu, proposed the development of Special Residential Zones, a concept being suggested by the builders’ body.

Along the lines of the Special Economic Zone for industry, such residential zones could be promoted to encourage affordable housing. Costs could be brought down through incentives and land made available by the Government.

OUR CHENNAI BUREAU