The Central Government has now decided to invite realty companies from across the world to showcase their construction techniques and adopt the selected ones to build affordable houses for the lower income group and economically weaker sections of the society. This move is reportedly in line with the Government’s “Housing for All 2022” scheme, which is aimed at providing “pucca” houses for the EWS and LIG category people. Is it possible to complete housing projects, which normally take 2 to 3 years within 90 days? The answer is yes, with the help of technology. In order to introduce such technology in India, the Government has decided to invite the global realty companies, to compete in the challenge, thereby, introducing the viable technology in the country. The firms across the world would be invited to demonstrate their technology to construct houses in lesser cost and lesser duration, with the materials available in the particular locality and by adhering to the building norms of the particular locality. The foreign firm would be required to partner with a local firm, either private or public and would be provided with land across the country , where they would have to demonstrate their skills. Would this move be a success? Would the economically weaker sections of the society be benefited by the same? Would this initiative also attract private builders to participate in the affordable housing sector?
It was quite shocking to note that most of the Indian homes both in the rural and the urban areas are smaller than the minimum square foot provided in the prison cells. A recent survey revealed that about 80% of the poorest rural area have floor area equal to or smaller than 449 square feet and about 60% of the poorest urban area have floor area equal to or smaller than 380 square feet.
Why is this disparity? What is the government going to about this? Would the Housing for all scheme 2022, improve the standard of homes and living in such areas?
The current generation of youth, i.e. the people covered under the age group of 20 to 35 years generally, working force particularly, which is rapidly rising in the last few decades, is estimated to reach 64% of Indian population. A recent research report has revealed that out of the said 64% of the population, 65%, aspire to invest in a property without compromising on the lifestyle and the rest 35% wish to purchase property, for the purposes of investment. What are the factors, that need to be taken into consideration by a Developer, in order to cater to the rising needs of the ruling population?
- Compact and well designed homes with higher resale value
- Location with good infrastructure and connectivity
- High project security and value for money
- Availability of ample car parking spaces.
In order to cater to the above needs, the real estate developers need to come up with housing solutions that are tailor made to the requirements of the now emerging investors. The Developers, also need to employ virtual reality, by providing virtual tours to the interested buyers, thereby luring them into investing in properties tailor made to suit their needs. Would the Developers pay heed to the same and cater to the needs of the emerging class of investors?
The surge in the Indian Housing Finance Sector and the growth in the corporate sector, has made the residential real estate an end driven asset class, with the next generation population between the age group of 25 to 35 years, becoming the new investor class. This demand from the emerging new investors has led to the price boom to the real estate market, giving huge returns and profits to the investors and the developers. However, the PPP or the purchasing power parity should also to be taken into consideration. The end user can only pay the amount that he could afford or how much he can borrow from the Bank, which inturn reduces his purchasing power capacity, resulting in the “Affordable” housing not so affordable any longer. What are the ways to make the housing sector for emerging investor class affordable? The answer is
- To digitalise land record, so that there are minimum risks associated with the acquisition
- To reduce construction cost through effective project management techniques that could result in marginal cost reduction
- To use the collections from premium FSI passed on by the Government to develop infrastructure such as road, transport etc.
- To rationalize the cost of stamp duty and GST.
- To reduce title and approval risks by adopting a definitive timeline approval timeline and procedure
- To develop efficient infrastructure to increase more lands for development
- To reduce the process of land by allowing development on fringes and outside development plan areas, where the development is cheaper.
- The government should encourage the developers by providing incentives by levying minimal approval charges in smart cites.
- The government should also enhance the purchasing power parity of the emerging class of homebuyers, by working towards their financial growth and improving job opportunities.
- The government should provide finances to the homebuyers at subsidized rates
Would the government pay heed to this? Would the “Affordable” housing become affordable to the emerging classes of investors?
The “Housing for All 2022” is a flagship program of the government, backed by the Ministry of Housing and Urban Poverty Alleviation, aimed at providing rehabilitation to the slum dwellers, promotion of affordable housing for Economically weaker section and Lower Income Group apart from providing subsidy for individual construction of houses. To achieve this move by the year 2022, the government has now decided to seek professional help from private parties and set up professional management unit to micromanage the housing for all initiative. How would the government work on this ‘decided’ move? For this initiative to work, the ministry would float bids, wherein private parties would be selected. The selected private parties would work along with the along with the Government to set up a programme management unit in the ministry. The aforesaid unit would coordinate with the states and city cells and help them in framing annual action plans to chalk out strategy for building affordable houses. Every state would in turn have a state level mission directorate, who along with the State monitoring and sanction committee would report to the state nodal agency for approval. The government has also established an integrated web – based portal – MIS (Monitoring and Information System) for monitoring housing scheme, which would be managing and monitoring daily progress and sanctions. This system would also have a third – party audit. Would the government, with this ‘decided move’ achieve its flagship mission? Would the private parties participate in this move? What is the guaranteed workability of this coordination between government and private units? What would be the outcome of such private – public partnership?
The Minister of State for Finance, in a meeting with the country’s apex body in real estate sector, under the aegis of the Ministry of Housing and Urban Affairs, stated that the Urbanisation, should not lead to proliferation of slums in the Country and it is the primary responsibility of the real estate sector to curb this phenomenon. In an event organised by the NAREDCO, he also stated that the Real Estate Developers would play an important role in realising the Government’s vision of Housing for All by 2022. Is this merely a theory or will it be implemented in action? Would the Government create any incentive scheme for the Developers, in order to lure them to participate in the scheme? Can the Slums in India, be completely eradicated? Would this only depend on the Government, or the slum dwellers also cooperate to achieve the Government’s move?