AHMEDABAD

Content & Research Team: E Jayashree Kurup, Rishab Jain, Sruthi Kailas, Bhawna Mongia, Preeti Sharma, Neha Nagpal, Renu Arya

Layout Design:Harsha Khattar

ContentUrbanisation and migration has led to a rise of population in the city, bothurban and rural. This definitely puts a growing pressure on the housingdemand in the city, particularly in the EWS and LIG segments.

EWS/LIG HOUSING

Acity can be considered trulyinclusive if a housing unit meetsevery citizen’s requirement. With

a ‘Home for All’ by 2022 as a declaredmission of the ruling BJP government, itis worthwhile to define the mostimportant category that contributes tothe housing shortages – AffordableHousing. This has been a loosely usedterm over the past few years. Should itbe categorised by size, price or justcategorised as EWS/LIG/MIG etc?

Magicbricks sought official sources toarrive at the shortfall numbers. We usedCensus 2011 as the base. The variousgovernment-run schemes that target theEWS and LIG housing undertaken bythe AMC and AUDA have produced justabout 12,000-13,000 units. Supplyfrom other sources such as the GujaratHousing Board would also not be ableto make up the existing demand (2.8lakh approx) in the sector.

To engage the interest of the privatesector, financing for EWS and LIG hasto be stepped up with state run subsidiesand tax reliefs to protect privateinvestment. In Ahmedabad, the financeinitiatives include GRUH Finance Limitedand MAS Financial Services.

According to PropIndex (Jul-Sep 2014),the quarterly publication that studiesdemand and supply of listed propertieson Magicbricks, excess supply in the Rs1 crore plus budget range inAhmedabad indicates that developersare more inclined towards buildingluxury and upper mid income homes asthese fetch larger margins. To bring thisinterest towards affordable housing,urgent steps need to be taken is anambitious 8-year time frame. In thispublication, we have studied someinternational models to see if India canlearn lessons from these.

Editor’s Note

E Jayashree KurupHead-Content & Research, Magicbricks.comjayashree.kurup@timesgroup.com

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Talking about the scope of development in the affordable housing segment,it is essential that the government takes steps to incentivise the private sectorto encourage PPP models in this segment.

HOUSING SCHEMES

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Magicbricks data reveals that there exists ample supply particularly ofplotted units in the budget range of upto Rs 10 lakh. As these stats aretracked on the basis of online activity of property buyers on Magicbricks,the negligible demand for properties in this budget are understandable.

MAGICBRICKS STATS

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When India talks about its mission of LIG/EWS housing and ‘Housing forAll’ by 2022, it can seek learning from Singapore, a country which is apioneer in the field of public housing with 82 per cent of its residentpopulation living in public-built houses.

INTERNATIONAL MODELS

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Government authorities and real estate experts believe it is imperative totarget the EWS and LIG housing segment if India is to overcome the housingshortage it currently faces.

QUOTABLE QUOTES

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EWS/LIG HOUSING

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As per Census 2011, the totalpopulation of Ahmedabad was72,14,225. During 1991-2011,

population in the city grew at a CAGRof 2 per cent. At this growth rate, thecurrent population can be estimated tobe about 76,55,793. Urbanisation and migration led to a riseof population, both urban and rural. Thisputs a pressure on the housing demandin the city, particularly in the lower end. Affordable housing is a major concernacross the country and Ahmedabad isno different. Availability of housing,particular in the *EWS and LIGsegments, seem to be grossly under-

supplied. This is clear by the number ofpeople living in rental accommodations.As per Census 2011, the total number ofrented units under the EWS and LIGcategories (urban population) wasaround 1,84,600. If we add to this thenumber of such units occupied by largerfamilies (more than 5 family members)we get a whopping figure of 2,63,962 units.This can be considered the unmethousing demand in these segments in2011. Thus, it can be estimated that in2014 this unmet demand would havegrown to about 2,80,119 units. Even though the government authorities

such as AUDA (Ahmedabad UrbanDevelopment Authority) and AMC(Ahmedabad Municipal Corporation)are coming up with schemes to cater tothis ever growing demand in thesesegments, participation of privateplayers is still limited. Thus, there stillexists a huge scope for development inthis sector. (*EWS and LIG housing is defined on the basis ofno. units under the 'no exclusive room and 1BHKcategory. Affordable housing demand is taken asthe sumation of no. of rented units under theabove two categories plus owned household unitsthat are occupied by more than 5 people &housing under any other category, as per Census 2011.)

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HOUSING SCHEMES

For the scope of developmentin the affordable housingsegment, it is essential that the

government takes steps toincentivise the private sector toparticipate in the same. Someimportant points:

DevelopersPresently in India, privatedevelopers have a tendency tobuild largely in the luxury, upper-mid and mid-income segments

since these fetch higher marginsas compared to the low incomehousing. This is also indicated inthe latest edition of PropIndex (Jul-Sep 2014), the quarterly IndiaApartment Index by Magicbricks.Demand and supply figures inAhmedabad show a significantover-supply of approximately 13 per cent for properties in the

Rs1 crore and above range. Though, there have been someprivate developers in Ahmedabadwho have come forth with theEconomically-Weaker Section(EWS) and Lower Income Group(LIG) housing, privateparticipation in this segment stillleaves a lot to be desired.

Government schemesAt present, it is only AhmedabadUrban Development Authority(AUDA) and AhmedabadMunicipal Corporation (AMC)who have launched certainschemes that focus specifically onthe EWS and LIG segments. These schemes include: l Around 2500 EWS and LIG

under-construction units byAUDA in locations such asNikol, Kathwada, Khodiyar etc.

l Around 10,000 EWS and LIGunder-construction units by AMCunder various affordable housingschemes. These houses arecoming up in 15 differentlocations, including localities suchas Vejalpur, Nikol, Chandkheda,Chandlodia, Thaltej, Kali, Vadaj,Vastral, Kankaria and Shahibag.

Demand and supplyThe effort government bodies aremaking in the affordable housingdirection, a look at the existingdemand vis-à-vis the supplythrough these schemes, indicatesthat the segment remains grosslyneglected. What is lacking is theinvolvement of the private parties. It would be a daunting task tomeet the existing demand if thegovernment does not provide therequired incentives to the privatedevelopers. A public-privatepartnership is probably the onlysolution in a scenario whereindevelopers are unwilling to getinto the affordable housingsegment unless they are offeredsome subsidy on the land cost.

“AT PRESENT, PRIVATEDEVELOPERS ACROSS

INDIA HAVE A TENDENCYTO BUILD LUXURY,

UPPER SEGMENT ANDMID SEGMENT HOUSES

SINCE THESE FETCHHIGHER MARGINS

WHEN COMPARED TOLOW INCOME

HOUSING”

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Site (Final Plot No Area of Plot in sq mt Total No. of Type of sq m & ownership) Dwelling Units Dwelling Units

Affordable Housing Schemes by AUDA

86, T.P. –110, Kathwada 34106.68 1120 EWS

70, T.P. –110, Kathwada 12591.56 532 EWS

92, T.P. –110, Nikol-KathwadaRoad 8192 504 LIG

56, T.P. –60, Khodiyar 2808 152 LIG

60, T.P. –60, Khodiyar 2836 156 LIG

Affordable Housing Schemes by AMC

211, TP-16, Rakhiyal 5,585 288 EWS

152, TP-106, Vastral 6,782 220 EWS

188/A, TP-113, Vastral 11,355 656 EWS

90, TP-102, Nikol 10,204 1,024 EWS

132, TP-110, Nikol 10,432 EWS

192,193,194,TP-2 Central Zone 8,436.70 282 EWS

9,11,12,13,TP-14 Central Zone 6,586.90 168 EWS

50,TP-19 Kali 4,063 168 EWS

52,TP-19 Kali 6,501 276 EWS

407,2408,TP-28 Vadaj 5,101 190 EWS

824,TP-28 Vadaj 6,421 276 EWS

280,TP-38 Thaltej 3504 192 EWS

193,TP-45 Chandlodia-Gota 11870 528 EWS

78,TP-27 Vejalpur 3,332 144 EWS

77,TP-27 Vejalpur 9,636 480 EWSSource: AUDA & AMC

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Source: Magicbricks.com

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MAGICBRICKS STATS

According to the data available with Magicbricks, and considering the price bracket of uptoRs 40 lakh in Ahmedabad, more than 95 per cent demand exists for properties in the rangeof Rs 20-40 lakh. However, supply in the category remained significantly short at

78 per cent. As this demand is tracked on the basis of online activity of property buyers onMagicbricks, the negligible demand for properties upto Rs 10 lakh is understandable. Buyerslooking for these properties rarely have access to the internet. What is significant though is thesupply available in these budget categories in different property types. Let’s take a look:

Apartments

l Apartments priced upto Rs 20 lakh witnessednegligible demand

l More than 95 per centdemand for apartments wasin the Rs 20-40 lakh range

l Almost 15 per cent supplywas noted in the Rs 10-20lakh category

l Apartments priced within Rs 30-40 lakh saw themaximum demand of morethan 50 per cent

Residential Houses

l Supply of houses was seenacross budget ranges withunits priced upto Rs 10 lakhnoting 17 per cent supply

• Houses priced at Rs 10-20lakh saw a moderate supplyof 17 per cent while morethan 65 per cent was notedfor properties in the Rs 20-40lakh range

• Demand was also largelyconcentrated in the Rs 20-40lakh range

Plots

l Plots were the most suppliedproperty type within a pricebracket of upto Rs 40 lakh

• Maximum supply was in theupto Rs 5 lakh category at36 per cent and Rs 5-10 lakhrange saw a supply of over15 per cent

• Supply of 24 per cent was inthe Rs 10-20 lakh range.

• Maximum demand (47%)was in the Rs 30-40 lakhbudget range

When India talks about itsmission of LIG/EWShousing and ‘Housing

for All’ by 2022, it can learn fromSingapore, a country which is apioneer in the field of publichousing with 82 per cent of itsresident population living inpublic-built houses.Over the years, Singapore hasimplemented city planning andurban-management policies thatbenefit the poor. Its housingprogramme has been successfuland admired world wide forproducing low-cost affordablehousing on a large scale.Most of the residential housingprojects are publicly governedand developed. They aremanaged by the Housing andDevelopment Board (HDB). Thesehouses are cheaper than theprivately built homes and cater toboth middle and upper-middleincome groups. Located in self-contained satellite towns, thesehouses have facilities such assupermarkets, schools, clinics,hawker centres and sportsrecreational facilities.The HDB built more than half amillion units of public housingfrom 1960-1990. About 85 per

cent of Singaporeans now live inpublic housing estates. These HDBflats are sold on a 99 year leaseagreement, with almost 90 per

cent owning such subsidisedleased homes. In 1960, 1970 and1980, thisownership figure was at 9, 36and 74 per cent, respectively.Those, who still could not affordthe cheapest forms of publichousing despite financial support,are provided with rental flats.

Eligibility criteria Buyers of HDB public housinghave to satisfy certain eligibilityconditions. These are: • Singapore citizenship• Non-owner of any other

property• Owner occupancy• Minimum family size of two• Household income below the

income ceiling set by HDB These eligibility rules were verystringent in 1960s-70s. They wererelaxed slightly only when most ofthe population had beenadequately housed.

Key learnings • Government subsidies for public

housing keep the cost and pricewell below the market rate.

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How isHDB

successful

l It received very strongsupport fromSingapore government.

l Large amount of fundswere allocated tocreate public housing.

l HDB was given legalpowers, such as powerto resettle squatters.

l Compulsory landacquisition allowed thehousing body to getthe land for publichousing in a countrywhere land is scarceand costly.

INTERNATIONAL MODELS

• The functioning of HDB is a clear modelfor others to follow. HDB emerged as themajor land-acquiring authority by 1985.The development body owned more thanthree-quarters of the land in Singapore. It is interesting to note that HDB does nothave its own land bank. It bids for landfrom authorities, competing with otherland users and government agencies. The eventual cost of the land remainsconsiderable, yet well below the freemarket price.

• Compulsory land acquisition inSingapore is supported by a soundresettlement policy. The ResettlementDepartment has been a permanentdepartment within the framework of theHDB since 1963. It is the central authorityfor re-settling squatters from the state andprivate land, required for development bygovernment and statutory boards.

• Besides acquiring land cheaply, HDB alsokeeps the cost of production low, so thislow cost can be passed on to theconsumers, keeping the prices of housingunits commensurately low.

• The beginning of the housing policy wasfrom providing rental units. In 1964,when Singapore realised that the acutehousing shortage had been eased, itlaunched a new scheme called ‘HomeOwnership for the People’ to provide andassist people to purchase low-cost flats.

“ABOUT 85 PER CENT OFSINGAPOREANS LIVE IN PUBLIC

HOUSING ESTATES. HOUSESMADE BY THE HOUSING ANDDEVELOPMENT BOARD ARECHEAPER THAN PRIVATELY

BUILT HOMES AND CATER TOBOTH MIDDLE AND UPPER-MIDDLE INCOME GROUPS”

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Since 2009, Brazil has beenimplementing an ambitious nationalsocial housing programme: “MyHouse, My Life Programme”(Programa Minha Casa, MinhaVida - MCMVP). The initial goalwas to contract 1 million housingunits in the biennium 2009-2010.

Since 1998, housing policies inChina focused on providing supportto home ownership for the middleand high income families throughdifferent financial arrangements.From over 80 per cent public rentalin 1981, the country today has 80per cent home ownership.

About 60 per cent Vienna’sresidents live in subsidised flats,including both city-owned andlimited profit housing associations.Affordable homes are providedwithout sacrificing architecturalquality. Vienna distributes housingsubsidies through a process knownas Bauträgerwettbewerbe orDevelopers’ competition.

BRAZIL

CHINA

VIENNA

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QUOTABLE QUOTES

Meenaxiben PatelMayorAhmedabad

Anandiben PatelChief MinisterGujarat

We not only focus on providing homes to the poor, but offer them basic facilities such as water, schools, electricity and healthcarefacilities. As per the Mukhya Mantri Gruh Yojna, the city aims to be slum-free by providing‘Housing to All’. Under the scheme, about 22 lakh homes are planned in the urban areas and another 32 lakh are being planned in the rural areas. The scheme includes the EWS who earn less than Rs 1 lakh annually, LIGs who earn between Rs 1-2.5 lakh per year and MIGs earning above Rs 2.5 lakh per year. They will be provided with easy loans, installments and interest subsidies.(as on Feb 2014)

The municipality envisions a citywhere every person owns a pukkahome equipped with all the basicfacilities such as water andelectricity supply. The corporationand the government are workingalong with private players onseveral schemes to achieve thistarget. The government is targetingthe unused and vacant land toconstruct these homes. In February2014, approximately 11,000homes were allotted to peoplebelow the poverty line. More suchschemes are expected in future. (as on Feb 2014)