State Of Low-Income Housing Finance Market 2018 Report
According to the State of the Low-Income Housing Finance Market 2018 report, with increasing urbanization and the lack of planning for housing, there is an estimated shortage of 10-12 million low-income homes, along with 26-37 million urban poor who live in poor quality informal homes.
Ironically, the huge demand is not translating to queues for homes as supply-side issues seem untenable. From developers to innovators, the stakes have been simply unaffordable for the many participants in this segment.
Land cost is the first hurdle. Next, the licensing process takes very long and your capital is locked. When you get through that and build the places where you can get something built for Rs. 800 per sq ft, there are no buyers as there is no livelihood, transport or other infrastructure.
You see statistics that say 10 lakh affordable homes are under construction. Many homes that have been built remain unsold and those sold are not occupied. Buyers cannot get a loan, and many do not want to move as they may lose their livelihood. Developers bear the brunt as they are expected to manage their capital, handle construction, sell, arrange money for buyers.
A recent report by FSG and National Housing Bank shows that only 1 per cent of the housing supply in this segment comes from large and branded developers, and 90 per cent of the supply of low-cost homes is met by small and informal developers. Ground-level experience shows that most of them build incrementally, says India Fellow, The Terwilliger Center for Innovation in Shelter (TCIS).
The report notes that projects by large and mid-sized formal developers have largely been unsuccessful as they tend to be expensive and located in less desirable locations that are further away from the city.
While small developers are doing the heavy lifting to build low-cost homes, they lack the skills to meet the demand and do not have anyone supporting them.
While the general picture is bleak, there are signs of hope. Brick Eagle, for example, incubates local developers and provides them access to capital, technology, management expertise to help them scale-up and deliver affordable homes for the low-income segment. It has delivered 2,000 homes so far and aims to incubate 20 developers in 20 cities by 2020 and deliver one million affordable homes by 2030 – about 5,000 homes per developer per year.
Source Link- https://www.thehindu.com/