Page 18 - CO JAN 2020

COVER STORY

The Drag Factors
While the joint efforts of the Government and the RBI to boost
affordable housing have fostered positive results, there are various
factors affecting the pace of affordable housing development in
India, mainly by restricting private sector participation:
• Unavailability of land at a reasonable cost
• Lack of Financial support from commercial banks for
Developers
• Suitable financing options for beneficiaries who predominantly
work in informal segments
• Lack of awareness amongst the intended beneficiaries
• Delay in Approvals
• Construction costs and lack of skilled workforce
• Lack of suitable mechanisms for maintenance
• Lack of Transparency in the system

this segment since volume plays a larger role in the affordable
housing segment.

We are entering into the affordable Going forward
housing segment. We are coming up with Even though affordable housing segment has the potential
two projects to begin with an estimated
investment of around `900 crore. to the tune of 4- 5 trillion it is a highly untapped segment.
BIJAY AGARWAL, GROUP MD, A comprehensive framework for the development of affordable
SALARPURIA SATTVA housing is the need of the day. It can be brought about with the
introduction of innovative microfinance schemes for the lower
income group at the lower level of
interest. Effective financing through
micro mortgage by utilizing the
reach of self-help groups and
other innovative financing
although land prices fall exponentially from the city center schemes to reach the
to the peripheral location of the city, the construction larger section of the
cost generally follows the gradual trend from premium group such as EWS
luxury, mid-income to low-income housing. For and lower income
instance, as per Jones lang LaSalle study, if group.
the land is acquired at a reasonable cost of
`150-250 per square feet an affordable housing project The next few
with basic amenities( construction cost of `800-1100 per years until 2022,
square feet would result in the minimum selling price of will be action-packed for the
`800-1000 per square feet. Thus, construction costs nearly affordable housing space.
account for 50–60 per cent of the total selling price for Policy impetus coupled with
affordable housing. This is huge, if there is no volume in various state government
schemes and initiatives
and active private sector
participation will result in tailwinds for the
sector, making Housing for All a commercially viable opportunity.
We plan to focus on mid-income and
affordable housing projects, the segment There exists a strong pipeline of 29.63 million houses, which are yet
that has been driving demand for residential to be built under the PMAY scheme. Further, about 350,000 units
units in India. are being developed by the private sector (as per 800 projects
IRFAN RAZACK, MD, PRESTIGE GROUP. tracked by India Infrastructure Research).
Meanwhile, the increased construction activity in the sector will
have a cascading effect on core sectors such as cement, steel,
and equipment as well as on other allied sectors. The construction
techniques will evolve and advanced technologies such as precast
and pre-fabricated technologies will see a surge in demand.

18 CONSTRUCTION OPPORTUNITIES|JANUARY 2020