Builders now eye huge LIG home market

Even though India is among the top developing countries having the most number of high net worth individuals (HNWIs), people under low income group still remain dominant among the total population, and need to have a shelter of their own without stretching too much is one of their major priorities. 

According to an estimate, India’s low income group families in urban areas need more than 15 million homes at a price range of Rs 5 - 15 lakh and seeing the present days economic scenario, low growth and high interest, providing such a high number of housing is not going to be easy for the government, unless the private builders also pitch in, according to industry experts.

A recent report by Deloitte India has analysed that the market for affordable housing is about Rs 9 lakh crore and real estate developers are having a great chance to tap this huge market at this hour of slow moving business condition for other categories of housing.

In about 19 months since June 2011 there has been a supply of 30500 LIG housing units whose prices were tagged below 10 lakh. Mostly launched by private developers across tier I and tier II cities, 39 per cent of the housing units were launched in Gujarat itself.

Though financial institutions, particularly the housing finance companies, show grater interest to provide loan at considerable low interest to affordable home loan seekers, the gap between supply and demand is huge due to various soci-economic factors.

India has the large number of low-income families in urban areas whose monthly household income is between Rs 10000 – Rs 25000.These people can afford a privately build houses which would cost them some where between Rs 4-10 lakh without any financial aid from the government, said a top official of Housing and Urban Poverty Alleviation (HUPA) ministry, while launching a report on LIG housing market in India, recently.

This group needs about 1.5 crore homes, which boils down to Rs 9 lakh crore business for the developers and Rs seven lakh crore for banks or housing finance companies (HFCs).

Though most of the housing finance companies did not favour loan to low income customers, the things have changed now with more and more HFCs are showing interst to tap these segment and as of now over ten housing finance firms are lending the race in providing financial help to buy homes for low income customers.

While Deloitte’s report has highlighted that three cities such as Ahmedabad, Indore and Mumbai are top the chart in providing housing below Rs 10 lakh with over 20 projects in each city, in the northern part of India, the supply of low income housing (LIH) is very significant.

States such as Madhya Pradesh, Maharashtra and Gujarat are doing better than other states across the country by providing affordable housing.  Of the 30668 LIG homes launched during the observation period, Gujarat has recorded maximum supply of 11,823 units followed by Maharashtra and Madhya Pradesh with 8513 and 4759 housing units, respectively.

 

The reason for Gujarat taking the larger share of low-income market is that developers understand the potential of the LIG market much better and early than others and the state government also promotes such people-friendly schemes by providing fast approvals.

Real estate sector needs encouragement: Girija Vyas

Girija Vyas

New Delhi: Housing and Urban Poverty Alleviation Minister Girija Vyas today said the real estate sector, which is grappling with problems like manpower shortage, should be encouraged to boost the economic growth of the country.

Speaking at an event organised by CREDAI, Vyas said the urban population has registered a decadal growth of approximately 32 percent.

"There is a large stake in ensuring that cities and towns are efficient in order to help India achieve an eight percent GDP growth and to contribute to other developmental goals. Real estate has the potential to create the right economic environment for such a population expansion," Vyas said.

She said the sector is the second largest employer after agriculture and its multiplier effect on other industries is well known. The potential of this sector to create a positive impact on Indian economy should be encouraged, she said.

She added India's real estate sector continues to struggle with manpower shortage and by 2022 it alone will need 30 percent of the human resources which amount to 24.98 million personnel.

Vyas also said that due to ever-growing urbanisation "our cities face problems of land shortage, housing shortfall and severe stress on basic amenities and services."

"2011 census puts the slum population at about 18 percent of total urban population. As per my ministry's estimates, the housing shortage in India today is 18.78 million households, out of which 95 percent is for Economically Weaker Sections (EWS) and Lower Income Group (LIG) categories," she said.

Vyas said this is "an alarming" situation and added that to prevent proliferation of slums has been an objective of the National Urban Housing and Habitat Policy 2007.

She said private developers had a big role to play in this area and low-budget housing, when subjected to mass production, made a great business opportunity with a social cause. PTI