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The real estate world has changed significantly after the global financial
meltdown caused by defaults on sub-prime loans in US. India was no
exception and the real estate market witnessed a contraction in both
volume and value. Real estate developers were gripped with the liquidity
crisis and were forced to change the ways of doing business. Downturn
and liquidity crunch forced developers to adopt a two pronged strategy -
smaller units at lesser prices. This oriented developers focus on the
Affordable Housing segment, which has become the buzz word in the real
estate market for the last few months .In this study we have attempted to
define Affordable Housing by using three key parameters viz. income
level, size of dwelling unit and affordability. While we have assessed the
demand and supply constrains, we have also highlighted the initiatives
taken by key stakeholders and their perspective concerns.

Home buyers face challenges while deciding “when” to purchase houses. While favorable economic conditions lead to
higher incomes for homebuyers, it also leads to spiraling real estate prices making it difficult for a buyer to purchase
homes even given their higher incomes. On the other hand, during economic downturns while real estate prices decline,
people have become skeptical about their incomes and adopt a more cautious approach to purchases. Affordable
housing may be a good strategy to this home-buyers dilemma and can help to ensure housing across different sections
of society.


The past year was one of several highs and lows for the realty sector. 2009 commenced with the economic slowdown
worsening and growth trajectories of the previous year seeing a setback. With uncertainty playing a key role in driving
market sentiment, the one constant feature through the year was the focus on 'affordable housing'. While India has
always been confronted by the housing dilemma, 2009 saw a spurt in activity to house India's poorest. With genuine
end-user demand existing within this property segment, several fund strapped developers in an attempt to improve cash
flows and liquidity, took up the baton of low-cost housing.
"Affordable housing is not about box-sized, budget homes in far-flung places where there is no connectivity to work
places and little surrounding infrastructure'' ."Affordable housing has to be able to cut across all income segments and
has to make economic sense in terms of proximity to work place. In India affordable housing is a combined public-
private collaboration and a strong political to enforce change‘‘. .

There is serious shortages of urban land at affordable prices in India, where encroachments, irrational land use and
absence of urban spatial plans are the norm. The total urban land stock in India is 2.3% of its geographical area and it
houses 30% of the country's population.

Is 'Affordable Housing' Really Affordable India :

'Affordability' has crudely been touted as the consumers' ability to purchase. However, this is a relative term that could
acquire different meanings under varying circumstances. With the government focusing on the LIG segment, 'affordable
housing' is now being measured in terms of property cost to annual household income ratio.
Affordable housing projects work on very different business models, which have a very low cost base. In India, where the
price of land, especially in metro/Tier I cities is exceptionally high, due to perceived scarcity, projects incur huge costs with
Government regulations forcing the developer to pass most of these incremental costs onto the customer in the form of
EDC(external development charges), IDC(infrastructure development charges) , PLC(preferential local charges),
transaction costs, stamp duties and registration fees.
However, with several developers opting to be part of India's housing revolution, a very different real estate market
belonging to the buyer is starting to take shape. Innovative construction techniques with the inclusion of value engineering
and better space management are being deployed, to help reduce construction costs by up to 20%. Also, the sector is
being given a boost with the favorable mindset of developers along with the government's thrust on infrastructure;
continued reform; lower interest rates; and housing friendly policies.

The low-income housing segment (MHI of Rs 5,000 – 20,000) is estimated at 22 Million households with an estimated
opportunity size of Rs. 1,100,000 Cr and is largely underserved

Urban Income Pyramid Offering & Supply of Housing Supply of Housing Finance
MHI1 lPrice of unit2 > Rs 25 lVarious mortgage finance
(Rs) 1% Lacs options available for
>80000 (0.7MM) segment
lPotential demand from

5% ~2 M HHs with lPotential size of mortgage

estimated Market Size market ~ Rs 400,000 Cr
40000– of ~Rs 500,000 Cr
80000 (3.4MM)
lVarious mortgage
4% lPrice of unit: Rs 10–25 lMortgage finance available
Lacs options broadly
30000– (2.7MM) available for segment
40000 lPotential demand from lPotential size of mortgage
~5 M HHs with market ~ Rs 675,000 Cr
20000– (3.4MM) estimated Market Size l
30000 of ~Rs 900,000 Cr
lMortgage finance
10000– (15.0MM) available broadly lSeverely constrained
20000 lPrice of House: Rs 3–10 supply of housing finance
Lakhs for informal sector
5000–10000 (21.1MM) lPotential demand from ~ lFinance available for MHI

22 Mn3 HHs with > Rs 12K in the formal

estimated Market Size sector, limited availability
33% below MHI of Rs 12K for
<5000 ~Rs 1,100,000 Cr
(22.4MM) formal sector and 20K for
informal sector
lPotential size of mortgage
Affordable Housing Project In India:

In the absence of adequate levels of research to determine customer preference on size, cost, and location a situation
of over supply seems to have set into the market in some locations. Even with several developers flooding the market
with projects, buyers opted to stay away, as smaller sized units of 800-1000 sq. ft. as compared to the anticipated
1200-1400 sq. ft. units were being priced in the same bracket of Rs. 25-40 lakhs.
Location of these projects and proximity to civic amenities were other considerations that kept buyers at bay. In fact, in
2009, the last few months barely 30-40% of new projects have seen absorption in the market. In some cases stock pile
up's in cities such as Gurgaon, Kolkata, and Bangalore are quite extensive and may take 4-16 months to clear.

Over-supply is also being blamed on 'price rise'. While earlier, projects were launched at subsidized rates to tide over
the economic crunch, with market sentiments improving and both investor and end-user interest picking up, prices are
being revised upwards to improve developers' profit margins. Research firm Prop Equity, while analyzing 882 projects
launched in 13 cities across the country has highlighted that there has been a 10-15% increase in the price of budget
homes in the second half of 2009.

There is increasing construction of low income projects across India but access to home financing for low income
customers is the major choke point

yers like the Tatas and entrepreneurs like Jerry Rao are starting to recognize the business potential of low income housing and constructing large projects, t

Mumbai :Ambivili Ahmedabad: Vatva Ahmedabad: Vatva

Neptune Group Taral Bakeri Foliage Developers
100 acres Phase 1: 800 units Phase 1: 400 units
Phase 1: 1800 units; Price: Rs 3.3 Lakh– Price: Rs 2.81 lakh
Sector 1: 600 flats sold 5.6 Lakh upwards
out in 3 days
1-BHK and 2-BHK
Rs 4.73 Lakh and Rs 8.40

Maharashtra: Boisar
Tata Housing Maharashtra: Karjat
67 acres: Phase 1: 1200 TMC – Matheran Realty
units for LIH 15,000 units by June
1-RMK and 1BHK 2011;
Rs 3.9 Lakh and Rs 6.7 Lakh 3,000 units in Phase 1

June ’09
Bangalore: Atibele 6,000 flats @ Rs 3
Janadhar Bangalore: Value Budget Housing
11 acres: 1500 units Development Corporation
1BHK and 2 BHK; Rs 4 Lakh and Rs 3-9 Lakh townships on
6 Lakh minimum
10 acre plots; 1 Million
intended flats

•“The biggest challenge for our customers is accessing loans - 1,700 out of 3,000 customers in Phase 1 wanted loans and out of
these 1,300 have got sanctions after 6-8 months. There are still 400 customers who are trying to get loans”- Joe Silva, Chairman
and CEO, Matheran Realty Pvt Ltd- Promoters of TMC.
•“We find many people willing to buy our flats in Ambivilli like drivers, shop keepers and even priests, however their biggest
problem is accessing finance in buying our flats”- Nayan Shah, Director of Neptune
•“Ever since we launched, we have been getting enquiries almost every day on housing loans from informal sector customers.
The challenge has been to service all such requests”- Rajnish Dhall, Promoter MHFC
The Imperatives For Success Of Affordable Housing Segment:
India's housing market has been forecast to grow to $90 billion by 2015 as compared to $12 billion in 2005. Affordable
housing is expected to account for 80% of the total housing demand over the next 4-5 years. This is indication enough that
this property segment will primarily drive the realty sector.
In fact, the residential segment is already leading the economic recovery of the sector and is expected to bring about
progressive solutions for effective implementation of projects through 2010. Some of these include the developers' ability
to overcome the challenges of project execution. Presently, builders lack technical and manpower experience in delivering
mass volumes as required under these housing schemes.
Additionally, as funds are being diverted to complete projects that were earlier put on hold, subsequent project delays are
inevitable. In fact, recent data is indicative of the fact that residential bookings outnumber deliveries in India by a ratio of
10:1. However, this scenario could be reversed with shorter project execution timelines of 24-30 months with developers
willing to make lower margins.
The industry is already abuzz with the anticipation of the upcoming budget and the incentives that both developers and
customers could benefit from. Buyers are looking forward to the implementation of the Direct Tax Code that will see an
increase in tax exemption limits against interest payment and rental income from the present Rs. 1.5 lakhs to at least Rs.
3 lakhs. Prospective customers are also hopeful that the interest rates will remain unchanged. Developers too are
counting on incentives for the introduction of rental housing and relaxation in ECB(EXTERNAL COMMERCIALS
BORROWINGS) norms for the development of integrated townships
Considering the stimulus that has been provided to the realty sector, especially in the residential segment, the onus now
lies on the developer not only to leverage these benefits to derive maximum returns on projects but also to ensure that
these benefits are shared equally with the customer, which would truly make affordable housing a reality.

Like microfinance, low income housing finance is a fundamentally different business model than traditional
housing finance, and requires completely distinct processes to appropriately assess customer credit
worthiness and risk
The housing shortage in urban areas accounts for approximately 24.71 million housing units, according to official
estimates. 21% of the total urban population lives in slums and 35% in one room tenements, without adequate basic
facilities such as piped water, sanitation, schools, health, and so on. These numbers are expected to touch 200 million
by 2020.

There is a huge demand-supply gap in urban housing for poor. The demand today is not just for affordable homes but
also for lifestyle products. Considering this factor, some real estate developers are now customizing their product to
cater to the affordable segment of real estate.

Illustrative Credit Appraisal Process for Low Income Informal Sector Customers

Credit appraisal

based on incomeGeneral
proof credit Sanction
Based on income documents
/ taxeligibility
forms appraisal loan

Scope of Business:
Margins, Credit/Debit Terms,
Savings Habit (e.g., from chit
Self employed / Professional Use Track Record
Based on the parameters sanction / reject
documents / tax papers generally
for credit appraisal
Reference Checks

Supplier/Customer Referrals
Gross Receipts
Personal Discussion
Background and Profile
Prior History and

Credit appraisal
appraisal to
to accurately
accurately understand
understand element
element of
of risk
risk within
within the
the informal
informal sector
sector requires
requires proxies
for traditional income documents
• Due
to the
the lack
income proof
proof and
and other
other verification
verification , , the
the informal
informal sector
sector requires
requires aa more
more ‘field
‘ --based
field based’ ’
to verifying
to verifying income
income and credit worthiness including visits to the customer’s business, conversations with
and credit worthiness including visits to the customer ’ s business , conversations with
NGOs//funds/local institutions the customer is linked to etc.
chit funds /local institutions the customer is linked to etc .

• ••

Affordable housing can provide huge benefits to families, communities and aid
overall economic development of state
Provide alternative to Urban
l~40M people live in
urban slums without
basic facilities such
as sanitation, water,
schools, etc
lRenters disempowered.
All power is w/ slum
lSlum lords “own” houses
Benefits for families of Urban and benefit from Slum
Poor Rehabilitation Schemes Aiding Overall Economic
lHousing is essential for lSlums create high Development
the well-being of a pressure on lConstruction of low
family infrastructure within income housing
lEnhanced security and a city provides
health through disproportionate job
organized housing with creation
access to sanitation lCreates significant
lAccess to better
services (schools,
Affordable Housing economic value for
state (taxes, ancillary
healthcare etc.) which economic activity,
are typically available source of labor
to higher-income groups potentially leading to
industry, etc
Creation of Low-Risk Asset for
Families Benefits to Communities
lLong term wealth lNeighborhoods with
creation due to value good quality housing
of asset, “saving on have lower crime
rent” & collateral for rates, stronger
loan local economies and
lA “security net” in
a better overall
crisis quality of life
lLow income houses
typically built on land
with low cost per sq.
ft. Low likelihood of
price depreciation,
According to real estate consultancy firm Knight Frank, good connectivity to work places is the most important factor
influencing buyers’ decision in selecting their residence. Pranay Vakil, chairman, Knight Frank, says: “Some projects
were launched with the expectation that they can influence connectivity.” The Knight Frank survey also revealed that
developers have to pay external and internal development charges to the government which are ultimately passed on
to the consumer thus increasing the overall cost of a house. “The EDC and IDC costs coupled with the high
transaction cost and stamp duty can go as high as Rs 350-400 per sq ft which is transferred on to the end-user by the
developer,” the report stated.

However, there have been a lucky few like the Patel Realty India’s project in Bangalore which sold 800 units out of its
1,000 affordable apartments in its Bangalore projects within 50 days of its launch. Similarly, Puravankara claims to
have sold 700 of its 1,120 apartment in the first phase in Bangalore. In Chennai, it claims to have sold out 900 of the
total 1,000 apartments. However, industry sources said the firm has so far sold out only 300 units and is struggling to
sell the remaining apartments in the market

No. 39/1&2, 40(P), 59/1&2,
60(P), 61/1&2, 62/1&2, 63, 64,




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HUDA Housing Scheme has been instrumental in providing Group Housing in Haryana's urban towns
like Gurgaon, Faridabad, Karnal, Panchkula, Sonipat, Hisar etc. In fact, owing to the constructive
efforts, the face of Gurgaon and Panchkula has been really altered. HUDA- Haryana Urban
Development Authority came into force in 1977 under the Haryana Urban Development Authority Act to
undertake Planned Development of Urban Infrastructure, to facilitate Property Management by
acquisition and disposition of land for Residential, Commercial, Industrial and Institutional Purposes.

HUDA Residential Plots

HUDA Allotment of Residential Plots is undertaken on the basis of the HUDA Plots Draw Results while,
an open HUDA Auction decides who would get the commercial HUDA Plots in Haryana. Hence,
Haryana HUDA has done a commendable work of keeping the Haryana Property market vibrant to
attract Foreign Direct Investment.

HUDA Group Housing Scheme

The initiation of HUDA Housing Scheme certainly was a landmark step by HUDA-Haryana Urban
Development Authority in order to ameliorate the Housing and community living conditions in
Haryana.In 1983, HUDA-Haryana Urban Development Authority felt an urgent necessity to look into the
Housing arena and initiated the HUDA Group Housing Scheme that aimed in providing affordable
homes with raised FAR-Floor Area Ratio and efficient Facility Management.HUDA undertakes Allotment
of Plots to Co-operative Group Housing Societies, Haryana Welfare Housing Organizations and
various Government Departments for construction of flats and houses under Haryana Group Housing
Haryana Housing Board has prepared a plan to develop economical flats in the NCR cities of Haryana.
The move will made residential properties in Gurgaon and its adjoining areas more affordable.
The Board will buy its own land. These flats will be built across the state, says SP Gupta, Chief
Administrator, Housing Board.
According to the drafted plan, 2,000 flats each will be built over 60 acres of land in Gurgaon and
Manesar. 200 more such flats will come up over an area of 10 acres in Farukh Nagar and Pataudi.
The government will be constructing 50,000 houses for the economically weaker section of society.
HUDA has been asked to hand over the land to people for the same purpose.
Around 422 EWS houses will be developed in Gurgaon soon, adds Gupta. The housing board will also
come up with more multi storeyed deluxe houses in the lines of 256 flats under construction in Sector
43, Gurgaon.
Source: Indianrealtynews .
Here are the latest Housing Projects that are available in Bangalore and Chennai for Home buyers. All
prices are in INR / sft as quoted by the Developer directly.
DLF Westend Heights Btm Extension Bangalore

Westend Heights New Town - Bangalore

Yes, I am interested
Location : BTM Extension

Plans : 2 & 3 bedroom apartments

Sizes : 1085 sq ft - 1820 sq ft

Land Area : 86 acres

Completion Date : End 2011

* DLF BTM Extension Bangalore *

DLF Westend Heights New Town offers 2 & 3 bedroom apartments ranging from 1085 to 1820 square
feet. It is G+19 storeys with excellent amenities. DLF Westend Heights Location 3.5 km from Apollo
Hospital, 4 km from IIM-B, 6.5 km from Jayadeva Flyover, 8 km from Electronics City, 9.5 km from Forum
Mall, 13 km from MG Road, 16 km from Railway Station / Bus Stand, 50 km from Airport. DLF Westend
Heights Common Amenities Clubhouse with indoor facilities like gymnasium, banquet hall, restaurants,
Billiards room, cards room, Spa, massage and beauty parlor, swimming pool, healthcare centre, shopping
complex, play area, iptv, safety & security, cctv, intercom facility, street lighting, earth quake resistant
construction, state of art infrastructural facilities, 24 hrs power back up, 24 hrs water supply and water
treatment plant, municipal water and Rainwater harvesting.

DLF Westend Heights Plans

Types----------Size(sq.ft)------Price INR(sq.ft)

- High Rise Apartments (Stilt+18)

- Excellent Location in Begur BTM Extension
- 4 Kms from IIM Bangalore, 8 Km from Electronic City, 13 Km from MG Road
- 86 Acres layout replete with fully loaded club house, landscaped gardens, sports facilities,
natural and maintained water body, wide roads.

DLF New Town Bangalore, BTM Ext. 2,100

Puravankara Purva Venezia Bangalore, Yehalanka 2,800
Puravankara Provident Welworth City Bangalore, Yehalanka 1,800

Sobha Sunscape Bangalore, Off Kanakpura Rd 1,978 - 2,128

Sobha Sunbeam I & II Bangalore, Off Kanakpura Rd 2,254


Kengeri region ,
Rs. 2000 – 2400 / sft
1 BH – rent starts from Rs.3000 – 3200
2 BHK unit – rent starts from Rs 6000 onwards.