Smart and Affordable – A Sharp Trigger For Overall Growth

Smart and Affordable – A Sharp Trigger For Overall Growth

Mr. Amit Ruparel, Managing Director of Ruparel Realty exclusively shares his thought with Realty Plus on smart and affordable living.

Over the last couple of decades, there has been a surge in urbanization wherein people are dwelling out of the rural and suburban areas and moving in urban areas. According to a UN-backed report around 600 million people are expected to make urban India their home by 2031 and one of the primary reasons for the shift is better job opportunities which further strengthen the aspiration of people to move to a bigger city. This rapid growth leans heavily on the existing pressure in the real estate industry. A major problem in urban India is about the shortage of land. As a result of this, people increasingly living in slums & squatter settlements and has deteriorated the housing conditions for the economically weaker sections of the society. It is estimated that almost a quarter of Indian households lack in providing adequate housing facility. To meet this ever-increasing demand, focus on affordable housing is imperative as it constitutes about 70 percent of the projected total urban housing need.

Despite the real estate market being severely affected by Demonetization for almost entire year of 2017 by negatively affecting the cash flow in the construction and real estate industry; 2018 seems be a promising year for the real estate industry. Considering the demand for housing in India, the central government has acknowledged the issue by introducing various policies such as – RERA, GST, Pradhan Mantri Awas Yojna (PMAY), Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Smart Cities Mission and others.

Affordable housing segment has been actively backed up by various housing schemes by the public sector and now with the introduction of Mumbai Development Plan (MDP) 2034, there is long-due boost given to the private and corporate sector. India, emerging as a global investment hotspot, has caught eyes of many in India and overseas. As per an IBEF report, the potential market size for affordable housing in urban India is forecasted to grow about 1.5 times from an estimated 25 million households in 2010 to 38 million in 2030. The MDP aims to put maximum stress upon making more open space available for building affordable houses; a provision has been made to add 42 hectares of open space as a part of the MDP.

Promoting Better Livability

The Government has unleashed several initiatives to give a fillip to affordable housing. Because over 5 million people in Mumbai live in slums – with improper sanitation and lack of essential amenities – MDP addresses this issue by unlocking 3,700 hectares of land for real estate development. Despite these measures, the shortage of funds and investments may or may not be able to suffice the essential amenity quotient for the masses. The point to take in consideration is that while we are constructing affordable houses, we also need to provide proper sanitation and hygienic living conditions to improve livability of the city.

Making Housing Affordable

The government has gone one step further in realizing ‘Housing for All’ mission by revising carpet area of residential units for interest subsidy under CLSS. It is a practical move by the government for both homebuyers and real estate developers as it will allow home buyers from LIG (Lower Income Group) to have increased subsidy in home loans which will strengthen their home buying decision. On the other hand, real estate developers who had been facing problem of unsold inventories will be able to drive increased sales which will also address the predicament of urban housing shortage. The move is in sync with the revised loan limits by RBI for affordable housing transcending increased sales in the sector. We have seen growing demand for housing from mid-income group, which remains the largest segment by far specially in metros such as Mumbai. The statistics have already been showing significant shift in consumer preferences towards the mid-level budget homes and with the recent government’s initiatives, we certainly feel it’s a positive step towards vision of Housing for All.

The Current ‘Situationalysis’

Land being a controversial issue appears to counter neglect from the private and corporate sector. Incentivising investments in affordable housing will encourage more private and corporate developers to enter the sector. These developers can bring a shift in approach – from process-driven to customer-centric environment. This shift in attitude makes the system more simple, systematic and less chaotic. Private developers express their challenges of land availability in Mumbai and heavy taxation levied on approvals and construction of houses. MDP 2034 caters to these challenges to some extent, but I believe, incentives will expedite the growth. For example, as per MDP 2034, if an owner wants to set up a no-development zone (NDZ) plot, only 25% of that plot has to be developed for affordable housing, another 25% should be left for public open spaces, 16% for other amenities and 34% for the builder. Considering these numbers, the panel at MDP recommends an increase in the builder’s share (34%) of NDZ to attract more private and corporate developers.

The Way Forward

Recently, the government decided to make affordable housing sector corruption free by eliminating all middlemen; thereby, increasing the profits for the developers and making the houses more affordable. Further, it is also taking efforts to ensure more economically weaker section get access to housing. Having these measures in sight, overall, there is exceeding positivity in the air. With various schemes by the Government as well as the introduction of private and corporate developers, I do foresee a boom in the affordable housing sector with a significant improvement in the number of Indians living in affordable homes and a hygienic and healthy environment.

Source : Realty Plus

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