90% Low-Cost Homes Supply Coming From Informal & Small Developers

1% of the low housing supply comes from large and branded developers, around 9% of the supply is built by mid-size and formal developers. The rest 90% of the supply came from informal and small developers who typically construct small projects on the outskirts of cities, like in the jurisdiction of Gram Panchayats.

0
53

90% Low-Cost Homes Supply Coming From Informal & Small Developers

Despite a robust growth in demand for low-cost homes, 90% of their supply in India is coming from informal and small developers. Several large and mid-size builders still remain unsuccessful in providing homes to low-income customers, said a report by consulting firm FSG and National Housing Bank (NHB).

The report ‘State of Low-income Housing Finance Market’ released on Wednesday by industry body Federation of Indian Chambers of Commerce and Industry (FICCI) said the loan books of affordable housing finance companies in India have grown manifold in a span of five years.

Read Also: Another 1.5 Lakh Affordable Houses Construction Approved Under PMAY

From a combined loan book of close to Rs 1,000 crore in March 2013, it has shot up to over Rs 27,000 crore at an average loan ticket size of Rs 9.3 lakh and facilitated the ownership of more than 230,000 affordable homes, the report said.

According to managing director FSG, low-income housing finance is expected to grow at 30-40% over the next five years.

As per the report, 62% of the new housing finance is being used to fund self-constructed standalone houses while 38% of financing from affordable housing finance companies (AHFCs) is taken up by low-income customers to purchase apartments, often in areas with higher land costs, where self-construction is less affordable.

The report pointed out that large and mid-sized formal developers have largely been unsuccessful in supplying affordable housing to low-income customers as projects tend to be more expensive and located further away from the city in less desirable locations. These distant locations also may lack infrastructure and require large investments, which further shrink the already low margins of such projects, the report said.

Read Also: Real Estate Developers Yet To Get Clarity On Goods & Services Tax Nuances

While 1% of the low housing supply comes from large and branded developers, around 9% of the supply is built by mid-size and formal developers. The rest 90% of the supply came from informal and small developers who typically construct small projects on the outskirts of cities, like in the jurisdiction of Gram Panchayats.

President of FICCI and chief executive officer(CEO) Edelweiss Group, said the industry is in consultation with the government to see if the current Pradhan Mantri Awas Yojana Gramin (PMAY) benefit limit of Rs 25 lakh can be expanded to houses in the range of Rs 50 lakh.

A lot of salaried people in urban areas buy houses in the 40-50 lakh range. The question is can we move from just affordable housing to “economy housing”, he said.

Read Also: State Of The Low-Income Housing Finance Market 2018: FICCI Report

The report said urban household living in slums could provide an opportunity for housing companies to expand their reach as slum dwellers comprise 17% of the urban population. In total, around 14 million urban households live in slums with poor living conditions. The estimated market opportunity for housing loans in notified slums stands at around Rs 23,000 crore, as per the report.

Source Link- https://www.livemint.com/

LEAVE A REPLY

Please enter your comment!
Please enter your name here