New Delhi: RICS (Royal Institution of Chartered Surveyors)in association with international property consultant Knight Frank today released a report Brick By Brick– Moving towards ‘Housing for All’. The RICS – Knight Frank report estimates that the current housing shortage in urban areas is around 10 million units. Most of the housing shortage lies in the Economically Weaker Section (EWS)and Lower Income Group Segment (LIG). It quotes that as of July 2019, 8.36 million houses have been sanctioned under the “Housing for All by 2022” initiative. Construction for 4.9 million units has begun and 2.6 million units of which have been completed. Given the past trend, additional 1.64 million houses are likely to be sanctioned by December 2019, making it highly possible to achieve the 10 million houses target by 2022. Projected subsidy disbursement over next 3 years for the same is projected to INR 1 trillion.
The latest RICS – Knight Frank report estimates that by the year 2030 more than 40% of the Indian population will live in urban India as against current figure of 34% which is likely to create a demand for 25 million additional affordable units. However, to address the huge demand, a subsidy–based approach may not be enough for maintaining sustained growth in the affordable housing segment. India’s urban housing shortage is being primarily driven by the EWS and LIG categories. An analysis of the demand supply shows, that on an average, nearly 0.6 million homes are required every year in the top eight cities versus a supply of 0.2 million units per year. There is a huge supply gap for urban housing and more so in the EWS and LIG category, i.e. houses with ticket size less than 2.5 million.Whereas, the demand in the EWS and LIG category is around 0.34 million. Shortcomings leading to shortage of affordable housing areunavailability of urban land for affordable housing and lengthy statutory clearance and approval processes.
Financing for affordable housing can be broadly classified into– debt, equity and subsidy. From Fresh disbursals of HFCs and Scheduled Commercial Banks (SCBs), it is evident that the share of EWS sector in new disbursals has come down each financial year from 21%in FY 2013 to just 10% in FY 2018. Moreover, even the share of LIG sector in fresh disbursals has also declined from 39% in FY 2013 to 33% in FY 2018.
HOME LOAN DISBURSALS
Source: Knight Frank Research
Since 2014, around USD 34 billion has been invested in Indian real estate across debt and equity. Commercial segments, which comprises office, retail and warehousing, has garnered majority share of this in the form of equity investments. The residential segment had 31% share and most of it was in the form of debt.
PRIVATE EQUITY TRENDS IN RESIDENTIAL
Source: Knight Frank Research, Venture intelligence
RENTAL HOUSING MARKET– Missing piece of the puzzle
The report also touches up Rental Housing Market and as per Census 2011, over 21 million (27.5%) urban households live in rented accommodations. The rental housing market is therefore projected to grow at a faster rate than rate of urbanisation over the next 20 years.The population living in rental housing has no willingness to own and landowners find rental housing unattractive due to Low residential yields, high risk of property litigation and cost of transaction, which leads to a high number of vacant houses in large urban centres
The report further goes to suggest strategies that can adapted for developing rental housing in urban India.
Knight Frank experts highlight that with “Housing for All”insight and the government moving to achieve the target, it is imperative to address the root cause of future housing shortage and suggests some counters to attack the challenge –
Nimish Gupta FRICS, Managing Director, South Asia – RICS said, “It is heartening to note that the government is set to achieve the target 10 million by 2022, which is an unparalleled achievement, globally! Going by the rate of urbanization this requirement will grow 2 ½ times to 25 million urban affordable houses. Hence, the sector has to devise sustainable growth model, with private and public development agencies collaborating to create an ideal ecosystem. The proposed mechanism should provide the ideal bridge between the crying demand for housing and the willingness of the developers to meet that in the regulated environment through professional practices.”
Shishir Baijal, Chairman and Managing Director of Knight Frank India, “Affordable housing is a high potential segment that the private development companies are yet to explore to its potential. Unlike other segments of housing, affordable housing poses an interesting challenge involving strategies at all levels. Given the requisite volume, this category may need to look at innovative solutions right across the stages of development including statutory clearance, design, building and construction management along with marketing and sale. We feel, a differentiated approach towards affordable housing will hold the key to its ultimate success and profitability.”
Image Source Knight Frank Report
Your email address will not be published. Required fields are marked *
Save my name, email, and website in this browser for the next time I comment.
Sign me up for the newsletter!
Notify me of follow-up comments by email.
Notify me of new posts by email.
Young Blitzboks know all about patience and determination
NOW & NEXT: TOP TRENDING AND EMERGING DESTINATIONS REVEALED
Pulse Active Stations to launch 10,000 smart kiosks across the nation in the next 3 years
Pune Municipal Corporation transforms Sonawane Hospital’s outdoor waiting space into a child-and family-friendly zone
TransUnion CIBIL Appoints Rajesh Kumar as Managing Director and CEO
2014 The Global Indian New Network (TGINN)