By mr. Anil Pharande,
Chairman - Pharande Spaces
Affordable housing is not just about providing homes to those
who need the most - it also plays a crucial part in a smoothly-running economy.
Sadly, most of the cities across the globe are struggling to
offer decent, affordable housing to their citizens.
India is not a unique case - the story is the same for both
developing & advanced economies.
The world is going through an intensive phase of urbanization,
but the growth in individual incomes is not keeping pace, and this presents a
gloomy picture for the housing situation.
Affordable housing gap..
Statistics indicate that over the next decade, the number of
people adjusting in substandard housing will rise exponentially. Incidentally,
India will be among the most challenged nations, unless the government is able
to realistically work on its electoral promise of ‘housing for all’.
The ‘affordability gap’ is defined as the difference between the
average rent people pay for their houses without having to spend more than 30%
of their family income, and the price of acceptable housing units.
In India, population growth has obviously triggered a rise in
the affordable housing gap, but it by no means the only country with this
problem. In the next 10 to 12 years, the world in general will have to come up
with an additional 10.6 crore (106 million) low-income housing units.
These statistics illustrate a serious problem - how will this
rising gap be bridged? In a country like India, what would be the means that
will allow the government to support faster affordable home deliveries?
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| Anil Pharande, Chairman - Pharande Spaces. |
Strategically, there would be three primary approaches to
resolve the problem, and all are centered on lowered cost of construction,
financing, land, maintenance and operations.
Even if individually implemented, each of the three approaches
will significantly cut the affordable housing gap, especially in nations like
India.
If these approaches could be implemented in a tandem, the cost
of affordable housing can be decreased by as much as 35% to 50%, gradually
leading to a manageable situation over the next decade.
Freeing Up Developable Land..!
Land supply is among the most important element in housing
prices. It is also responsible for the largest part of the overall investment
in buying a home. If the government decides to open up strategic land around
urban locations, it could be a huge solution to the rising prices of homes.
At the policy level, making this happen is not too complicated
either.
Most Indian cities have land parcels that remain unused or
underused. In most cases, this land either belongs to the government or
local/private authorities. Bringing forward these land parcels for real estate
development will greatly help in launching affordable housing projects.
Bringing Down The Cost Of Construction..!
Compared to other sectors such as manufacturing, the
construction sector has been relatively stagnant in the past years. One of the
reasons for this is lack of innovation - residential projects still use
traditional techniques of construction that were used some 50 years ago. This
is not the problem of India alone but many countries across the globe.
By replacing obsolete construction techniques with the latest
modern innovative technologies, housing prices can be reduced by almost 30% and
completion times by as much as 40%. For instance, using pre-fabricated
components of construction that are manufactured off the site are a sterling solution.
Processes like this, which are already in use in India but not
to the required degree, can improve the efficiency of residential building
deployment, and significantly augment budget housing supply.
A communal approach to construction materials purchasing by
groups of developers who are committed to the cause of affordable housing would
also help bring down housing prices.
Lowering The Cost Of Finance..!
In a cost-sensitive country like India, banking interest rates
play a huge role in housing affordability.
At the current interest rates, and even given the current
subsidies, it is next to impossible for low income earners to get loans to buy
homes. Banks and other financial institutions in the public and private domain
should introduce encouraging schemes like contractual savings to assist low
income earners to gradually accumulate the corpus needed to make down payments
on affordable homes. Of course, lower interest rates would greatly help the
situation.
Apart from these, the Indian government must also find means to
reduce the cost of financing to developers engaged in affordable housing
projects. It is encouraging that the new government is already
working on its electoral mandate, but there is still no sign of a unified
approach to implementation of its goals. Hopefully, we will see more progress
being made on the ‘Housing For All’ promise in the future.
About The Author..
Mr. Anil Pharande is
Chairman of Pharande Spaces, a
leading construction and development firm that develops township properties in
Western Pune. Pharande Promoters & Builders, the flagship company
of Pharande Spaces and an ISO 9001-2000 certified company, is a
pioneer in the PCMC area offering a diverse range of real estate products
catering especially to the 42 sectors of Pradhikaran.
The luxury township Puneville at
Punavale in West Pune is among the company's latest premium offerings.
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