Posts Tagged ‘Godrej Group and Ansal Properties’

India,slum-free in five years???

Housing for India’s urban poor

Housing for India’s urban poor

New projects provide hope of housing for India’s urban poor

The UPA government may be overreaching with its stated intention to make India slum-free in five years, but it is a step in the right direction.

A 2001 United Nations estimate pegged the number of the world’s slum-dwellers at 924 million; 31.6 per cent of its urban population.

Doubtless, the number is far higher now. The majority of these, by far, are in Asia, in cities such as Mumbai and Kolkata, ratcheting up the pressure on our already creaking urban infrastructure to dangerous levels. The problem must be addressed now.

And although it is early days yet, it appears that a new wave of companies – including the likes of Tata Housing Development, Value and Budget Housing, Godrej Group and Ansal Properties – may be doing so with new projects aimed at low-income groups.

So far, the real estate and housing boom in Indian metros has been fuelled by the growth of a middle class that has been expanding with liberalisation and the growth of the Indian economy. It has fed upon itself, creating a housing bubble. It is not a mechanism that can be sustained, as we are already starting to see.

Price levels that have been rising for years have run headlong into the global financial crisis, and the simple rules of demand and supply have come into play.

But at the bottom of the pyramid, there is immense scope for expansion with economically weaker sections and low-income groups accounting for close to 99 per cent of the urban housing shortage of 25 million units. To exploit this opportunity effectively, however, a change in mindset and approach is needed.

Profit margins must be lowered from their current skyscraper levels. Projects must be completed and handed over within a short time frame to produce working capital and preclude price hikes because of market fluctuations. High volume sales would make up for the lower pricing of individual units while making housing accessible to a far larger section of the urban population.

It is this logic that the new entrants in the low-income housing sector seem to be employing. However, quality must not be compromised in an effort to contain prices. Neither is simply increasing the supply of lowcost housing enough; there must be provisions to supply financing to potential buyers as well.

And distorted land markets in our cities must be set right to increase the availability of land for development. But these are not insurmountable problems. Public-private partnerships might supply some of the answers, providing developers with the financial muscle and flexibility required to deliver on their projects without cutting corners.

The opportunities must be explored and solutions found. If this new market logic is harnessed, the government’s objective may be at least partially fulfilled.