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The affordable housing segment offers a $11.8-billion (Rs 75,800-crore) opportunity to the private sector across seven major cities, according to a new report by real estate research firm Cushman and Wakefield and the Confederation of Real Estate Developers' Associations of India.
The demand for affordable housing is 535,400 units across Delhi, national capital region (NCR), Mumbai metropolitan region, Bengaluru, Chennai, Hyderabad, Kolkata and Pune. This is based on the demand for units in the price range of Rs 20-50 lakh in these cities, except for Mumbai where the range is Rs 50-70 lakh.
"This spells immense opportunity for the private sector to explore urban affordable housing in India through various models, which can be profitable for all stakeholders.
"Urban affordable housing has long been neglected in India due to various reasons such as high land prices, delays in getting approvals and low margins in the segment. Now with renewed focus from government, we expect this segment to gather momentum going forward," said Sanjay Dutt, executive managing director (South Asia), Cushman and Wakefield.
Overall, new launches grew 14 per cent in the April-June quarter compared to the previous quarter. Developers launched 7,000 affordable units in the quarter, an increase of 320 per cent on a quarter-on-quarter basis. Around 60 per cent of the total units were launched in NCR alone.
The government should promote private sector involvement that would play a significant role in bridging the current deficit of low-cost housing in urban areas, the report noted.
Private developers have shied away from this segment, due to low margins but incentivising the sector by making land available, reducing raw material prices and additional floor space index for such developments are bound to give a thrust to development of low-cost housing units, the report added.
According to the report, the public sector should look at aggregating land for project, with the private sector focusing on the construction and financing of the project.
Also, private sector participation, particularly in a public private partnership model, would also enable timely approvals, it added.
