Is a home affordable at Rs 35 lakh?

Vinit DeoPosiview ConsultingThe challenge lies in the concept itself. Is a home affordable at Rs 35 lakh? Rs 20 lakh? Rs 5 lakh? The term will be defined and understood differently by each of the stakeholders involved in our Indian affordable housing challenge. The concept of affordable housing has been discussed, debated, and deliberated immensely, and now, its time to get our hands dirty and get to work. It is important to realize the aspects that can enable the affordable housing dream in India. And it is not the job of one stakeholder alone, but in fact, a team effort to make headway in providing the 26 million affordable homes needed for the urban poor in our country. It cannot rest on the shoulders of the Government alone, but needs proactive involvement from the real estate developers and financial support from the banking and finance industry. It’s a challenge that can only be won by India together, and not in isolation.Developers will need to play their part in the affordable housing challenge, and their success rests on innovation. As curtailing costs of construction, labor, administration, etc. come with their own set of limitations, the industry will need to explore newer methods to reduce costs. This is not impossible and has been proven successful by more than a few affordable housing brands in the country today. The developers need to employ innovative techniques in construction of affordable housing, while ensuring the quality of the construction. Today along with the brands such as Vastushodh, Maple, and VBHC, major corporate groups are venturing in this space such as Tata Housing, Mahindra Lifespaces, and TVS. The focus for each of these and other new entrants into this sector has to be on innovation in construction with an aim to lower costs and maintain quality. This needs to be a major contribution proactively made by the Indian real estate industry to conquer this national challenge.It is not the developers alone as one of the major needs of this sector is capital. The banking and finance sector will need to play an important role in addressing this national challenge. Affordable housing requires a steady flow of capital for its successful implementation, and the banking and finance sector needs to support the industry and home buyers with customized financial instruments and terms to provide an extra boost to this sector. There needs to a robust re-finance scheme for construction of affordable housing projects along with other capital-intensive methods. These need to be made available on pan-India level for a large impact to this segment. From the affordable housing consumer point of view, the budget has already made an allotment of Rs 4000 Cr for low cost housing to the National Housing Bank (NHB). A process of identifying the right consumers truly in need of this finance will be an additional responsibility of the sector to ensure the funds go in the right pockets. The BFSI segment will play an integral role in conquering this affordable housing challenge.The most important role will need to be Government support and intervention to create an affordable housing environment conducive for success. Inevitably, land takes up the largest chunk of cost in any real estate project. India as a geography has no shortage of developable area; its just that we do not have adequate infrastructure to support the extended areas in thr outskirts of the cities and beyond. The policies of the new Government in areas like Industrial Corridors, Smart Cities, building new Habitats, Rurban mission will bring more areas in the fold of development. These will enable the industry to offer homes at truly ‘affordable and accessible’ price levels. The second responsibility of the Government, in an industry where time truly means money, is to ensure faster approvals for affordable housing projects. Timely approval processes can save huge costs to the developer, which can be passed down to the homebuyer. A synchronization of private and public thought and approach is indispensable to the success of winning this challenge.The affordable housing challenge definitely can be conquered and is well within our reach. The only key factor is teamwork between each entity involved in creating an environment to enable the success of affordable housing in India. It is the true partnership between developing, funding, and administrating that will ensure success. Bridging the gap between the demand of affordable homes and the supply is true progress for India, and if we stick together, the Indian affordable housing dream can be achieved.The author of this article Mr. Vinit Deo is Chairman and Managing Director of Posiview Consulting.