Is a home for everyone really an unreachable dream for India? This is a misconception born out of the massive hype about developers of more expensive homes generated in the media. In recent years, there has been a constant flow of debates about how builders specializing in flats to the well-heeled middle class should start addressing the requirements of the lower financial strata. In the bargain, the work being turned out by developers who are already doing this seems to get overlooked.
Despite the various challenges that this segment of real estate development faces, affordable housing ventures have in fact been on the increase in the country. Of course, there continues to be a shortage of such homes in the larger metropolitan regions of Tier 1 and Tier 2 cities. The reasons are not hard to arrive at – land prices around these cities are high and therefore such projects often become unattractive for developers.
However, thanks to developers who are dedicated to boosting the supply in this segment, there are precincts in the peripheries of larger cities such as Pune, Mumbai and Delhi where genuinely affordable housing projects are coming up. These developers are carrying on the work of providing truly affordable homes to the ‘bottom of the pyramid’ even as larger players complain about the rising costs of land and construction.
Where there is a will, there is always a way. Contrary to common belief, there are indeed ways to build truly affordable housing projects without compromising on construction quality, good amenities and even unit sizes. The problem is that most large developers either do not know how to achieve this, or are unwilling to enter this segment because of the lower profit they would make.
Here is a startling yet true market fundamental – it is possible to build projects that provide perfectly good homes in locations where they are needed, with price tags that would astonish most people. People are buying these homes with modest budgets of Rs. 10-20 lakh.
Nor do these projects have to lack amenities such as swimming pools, community halls, club houses, lawns, children’s play areas, gymnasiums, badminton courts and senior citizen facilities. These are completely equipped and decent-sized homes that offer their residents all the comforts and conveniences of much costlier projects.
Unlike the larger names in the industry, the developers of these affordable housing projects leverage their connections and market knowledge to build housing for those who need it the most. They make up for the smaller profit margins by building their projects with more units. Land is either acquired under various available government schemes or under agreements with locals who are eager to see their areas developed along modern lines.
Another method that these developers employ to manage their project costs is to consistently buy construction materials in bulk from the same suppliers. This ensures consistency in quality of these materials, and also the leverage of goodwill with these suppliers to ensure steady procurement. Thanks to the steady delivery of their projects and the huge demand for such budget homes, they are able to maintain healthy financial churn to support further projects.
In other words, even today, there are indeed developers who are making the seemingly impossible dream of the less privileged to live in their own homes come true. These developers are genuinely serving the needs of the people by believing in and upholding the motto that every Indian should be able to own a decent home.
So far, the encouragement that these developers receive to carry on their work has been mostly from the very people who need and buy these homes. However we are now looking at a time when the government itself has committed itself to take up this cause and spread the attainment of this dream throughout the country.
In the latest Union Budget, the Finance Ministry has made significant provisions for this sector. In the first place, it has reduced the FDI standards for minimum built-up area for affordable housing. Also, Rs. 4000 crore have been allocated towards the creation of low-cost homes. This is exceptionally promising for the affordable housing sector. Thanks to these incentives given by the budget, and we should see increased project announcements within this segment before too long.