Showing posts with label Affordable housing. Show all posts
Showing posts with label Affordable housing. Show all posts

Sunday 4 November 2012

Plenty of houses, few affordable

The 2011 census figures create a flattering illusion of Chennai and its suburbs as a city with a surplus of more than 1,00,000 housing units. However, as the recent data reveals, affordable housing still eludes the poor as government policies and real estate markets fail to deliver.

Despite poor supply and 95 per cent of the housing deficit pertaining to lower income groups, State government sources say that discussions are on to introduce new incentives to favour middle income housing – houses spanning 600 to 1,200 sq. ft.

There are 1.1 million households in the city and the residential housing stock available is 1.15 million – a surplus of about 50,000 houses. About 43,700 of them are kept vacant possibly waiting for well-paying tenants or for speculative reasons.

In Tiruvallur and Kancheepuram districts, which accommodate the fast-growing suburbs of Chennai, the figures of vacant houses are higher – 56,000 and 71,000 respectively.

On the contrary, in the last five years, efforts to generate affordable houses within city through development regulations have not shown much progress and have yielded only about 2,600 dwelling units (with an area of less than 500 sq. ft.). Incentives such as higher FSI (floor space index ratio that determines buildable area in a given plot) have hardly attracted builders.

Of the existing housing stock in Chennai, about 2,00,000 houses are not in good condition. Either new houses are needed or there should be assistance to rebuild. About 26,000 households live in houses without any room and another 4,27,000 families — with an average size of five members — live in small dwelling units with only one room.

The population is increasing and houses have to be found for the new inhabitants of the city. An earlier estimate showed that there is a need to generate about 4.2 lakh units for low-income groups by 2016.

A few years ago, when the subcommittee on housing for the master plan recommended 10 to 15 per cent reservation of developed land in all large and mid-sized apartment projects in Chennai for affordable housing, the government diluted the recommendation and made it applicable only to projects that are built on plots more than one hectare in size.

This move, as predicted then, has not yielded much.

Source: http://www.thehindu.com/news/cities/chennai/plenty-of-houses-few-affordable/article4065091.ece

Thursday 1 November 2012

Norms for affordable housing eased in Chennai

Chennai

The Tamil Nadu government has been devising schemes to encourage development of affordable housing across the state. A number of measures initiated in the recent past, the following need special mention.

According to official sources, the minimum plot extent required for Economically Weaker Section (EWS) is only 20 sq m within Chennai City and in rest of the Chennai Metropolitan Area it is only 40 sq m In case of EWS plots, the front setback and rear setback requirement is one metre only and no side setback is required.

In cases of residential or predominantly residential developments, where dwelling units for Economically Weaker Sections do not exceed 30 sq m in floor area each, 50 per cent of normally permissible FSI is additionally allowable over and above the normally permissible FSI; and where dwelling units for Low Income Groups do not exceed 50 sq m in floor area each, 30 per cent of normally permissible FSI is additionally allowable over and above the normally permissible FSI; provided that the developer or promoter or owner shall not sell these dwellings for other than the said purposes and no conversion or amalgamation shall be permissible in these cases.

In cases where the extent of the residential layout exceeds 10,000 sq m (1 hectare) ten per cent of layout area (excluding roads) shall be developed as EWS plots and the owner or developer or promoter shall sell these plots only for this purpose. No conversion or amalgamation shall be permissible in these cases of EWS plots.

In cases where the extent of the site where residential or predominantly residential developments proposed exceeds 10,000 sq m (1 hectare), the developer shall reserve minimum ten per cent of the site area (excluding roads if any handed over to local body) and provide housing thereon for low income groups with dwelling units not exceeding 45 sq m in floor area each, either within the site proposed for Special Building development/Group development/MSB development or in a location within a radius of 2 km from the site under reference. The developer or promoter or owner shall sell these small dwellings only for this purpose. No conversion or amalgamation shall be permissible in these cases of lower income group dwellings.

V Nagarajan, Property Consultant

For original source visit: http://content.magicbricks.com/norms-for-affordable-housing-eased-in-chennai/

Monday 30 July 2012

No speculation key to Chennai realty’s affordability

Absence of speculation by investors and the rise in property sales in the affordability segment has made Chennai’s residential market quite resilient to the looming threat of global economic turmoil, said a report by property research firm Knight Frank.

The city has observed healthy sales level with the vacancy level in the residential market recorded at 31 percent as stability in the market since 2010 has instilled confidence in end-users to proceed with their purchase decisions.

Nearly 42 percent of the absorption in FY 2012 has been in range of Rs 25 lakh to Rs 50 lakh, followed by the range of Rs 50-75 lakh at 23 percent. More importantly 14 percent of the residential units launched in FY12 belonged to the Rs 50-75 lakh ticket sizes, catering to the needs of the upper mid-end segment.

“The clubbing together of these categories essentially denotes the fact that the affordable and mid-end segment has been responsible for the absorption of total 85 percent of the residential units booked or sold, said Samanthak Das, National Research Head at Knight Frank.

Here are the key highlights of the report
  • Nearly 82,000 residential units are under various stages of construction in the Chennai market.
  • Out of the total residential units, FY 2012 witnessed the launch of approximately 14,900 units which are scheduled to be completed in the next 2-3 years.
  • 74% of the total number of residential units launched in FY 2012 fell within the Rs 50 lakh ticket size category. On the other hand, just 9% of the total units launched in FY 2012 surpassed the ticket size of Rs 1 crore to fall into the premium segment.
  • The preferred size for 3 BHK flats in Chennai has increased from an average of around 1250 sq.ft. during the recession to an average size of 1450 sq.ft. in the revival phase. The preference for 2 BHKs has also increased from an average of around 900 sq.ft. to about 1150 sq.ft.
  • Chennai market is end-user driven and therefor has been stable. Demand has been more evident in the mid-end category, primarily towards the peripheral locations of the city where majority of the affordable projects are located. Investor participation is long term in nature, thereby mitigating a speculative market scenario.
  • The absorption rate has also been helped by the cautious pricing strategies adopted by local builders. The absence of overt speculation ensured that the developers could peg their price of homes more realistically
  • The current scenario of job stability in this sector is at a much better position than it was during 2008-  2010. Thus, the demand for homes has reached a comfortable and stable growth trajectory, thereby leading developers to take cues for their residential projects.


  • Affordable housing projects continue to rule the roost in areas with social infrastructure lag and lower capital values.
Micro Market segmentation of the Chennai’s residential landscape
Central:The central part of Chennai has the highest property prices, the highest being Boat Club Road and Poes Garden North :This belt has been a little less developed than others and is dominated by small- scale industries like textiles and chemicals

West:The Western part of the city has some of the most upcoming locations. Setting up of electronic hardware corridor at Sriperumbudur has increased price in vicinity.

South :The corridor between Shollinganallur and Tiruporur in the southern belt will be the next investment destination for residential property in the city. The presence of the IT corridor and influx of IT companies has led to increase in demand for quality residential space.

Source: http://www.firstpost.com/economy/no-speculation-key-to-chennai-property-markets-affordability-397271.html

Friday 9 March 2012

Affordable homes in demand in Chennai

Chennai

Post-2008, when the economic slowdown began to tighten its hold on a majority of the country’s industries, the buzzword was ‘affordable’. Consequently, builders in the city began to believe that small and affordable homes were what would now be on the wish list of prospective buyers who now had a considerably lower purchasing power. Added to this, was the already-existing EWS (Economically Weaker Section) segment that was already in need of small, affordable homes.

Affordable housing, it seemed, became the need of the hour and they (builders) had to deliver. It’s been nearly three-years-and-a-half since the slowdown began. While the economic situation hasn’t quite improved as yet, the dream of affordable housing today, continues to merely remain a dream. Unrelenting land prices, the rising cost of construction materials and the fact that nearly one-third of the price of every property is paid to the government in the form of taxes and levies, have undoubtedly played spoilsport in this dream to provide affordable housing for all.

“Make no mistake that a huge demand exists for affordable homes; that has not changed,” said Suresh Jain, Managing Director, Vijayshanthi Builders, “When the economy was going strong, 1,200 and 1,500 sq ft homes were preferred by buyers. But with the slowdown, 400 sq ft is what has become their idea of affordable.” Jain believed that land availability and Government levies play the biggest spoilsport in the delay in providing affordable housing for all. “The first factor can be addressed. The city is expanding rapidly, and with a little infrastructure development, places like Chengalpet could well become part of a new Chennai. However, unless the government does its bit to provide some relief to developers and buyers as far as levies go, we don’t quite see much leeway being made in the affordable housing segement.”

What exactly are these levies? “Stamp Duty, Service Tax and VAT (Value-Added Tax) together contribute to roughly 36% of the cost of a house,” said N Nandakumar, Secretary of CREDAI Chennai and the Managing Director of city-based Devinarayanan Housing and Property Developments. “Some rebate on stamp duty will be desirable, while relief on VAT is also welcome, if there is serious intent to consider affordable housing,” he said, “Given the high land prices that exist and the rising cost of construction, the government will also do well to provide priority status for approvals of affordable housing, or even develop a pre-approval system for housing projects so that developers needn’t wait unendingly for approvals, which inadvertently translates to how much the buyer pays.”

Levies aside, connectivity and infrastructure seem to be the other big worry among developers. “One fact is quite clear. Should affordable housing projects come through, you can construct only in the far suburbs,” said A S Sivaramakrishnan, Associate Director (Residential Services) as Jones Lang La Salle, Chennai. “Let’s consider a suburb like Chengalpet. You have to realise that social infrastructure in places like these are far from desirable,” he pointed out, “If the government were to extend the metro rail project to a place like Thiruporur, then the situation in that locality is bound to improve on account of better connectivity.” According to Sivaramakrishnan, real estate in Chennai is driven in direct proportion to the IT/ITES sector. “If affordable housing activity is directed in proportion to the automobile segment (that has established itself on GST as opposed to OMR), you are likely to develop infrastructure in under-developed localities and affordable housing will thus become all the more easier.”

Urban planners believe that the only way forward for affordable housing is cross-subsidisation through partnerships between the government and private firms. Durganand Balsavar, city-based architect and urban planner, said, “Through cross-subsidisation, linked to the nature of tenure, it is possible to address the needs of affordability. The challenge is however complex. It may be essential to explore a regional perspective rather than one focussed only on urban areas.” GR Dattatri, former town planning officer, concurs. He said that integrated development will go a long way in ensuring that the needs of all income groups are met. “With proper planning and pooling of resources (from the government and private sector), it is possible to implement affordable housing projects, even within the city,” says Dattatri, “For instance, there is a big opportunity for this kind of housing, in Ashok Nagar, where Tamil Nadu Housing Board (TNHB) has land reserves. This has been done earlier in Besant Nagar, Mogappair, Anna Nagar, etc.”

Durganand added that such initiatives have been carried out in other Indian cities like Mumbai, Indore and Pune. “We must take a cue from such projects and explore new initiatives in upgrading slums to ensure safety and hygiene, and better living conditions, while keeping the livelihoods of slum-dwellers in mind,” he added. There is a huge shortage of housing in the country (about 26 million) and most of the demand is in the LIG (Low Income Group) and EWS (Economically Weaker Section) categories. As Dattatri said, “There is a misconception about affordable housing. It is not for the Middle Income Groups (MIG) but for those in the EWS and LIG sections – that’s where the shortage really is.

The government and the developer community need to break the barrier of mistrust between them and work this out together.” Of course, challenges are aplenty. Durganand said, “The challenges that affordable housing confronts is the high land value and construction costs. The strength of the industry is the availability of human resource. Judicious innovation – with a combination of technology and human resources creating livelihoods – could address the needs of affordability.”

In fact, Durganand has been involved in several such projects in the country, mostly in smaller towns, with the involvement of local communities. He explained, “To address affordability, we have often built a core house with two rooms which can be added upon over time as the family saves. At a recent seminar in Mysore, we suggested new models of supporting affordable housing. One of the challenges in affordable housing is sustaining quality, which can be addressed by ensuring that the family and community is part of the process. It requires a socio-economic paradigm, very similar to providing accessibility to education for all. Housing is a basic need. Several forms of housing could be explored like core houses that grow, incremental housing, renew existing houses, rental housing or cross-subsidisation.”

So, there is still hope, after all. How all this translates into viable solutions in the local context, needs to be seen. It is however clear that affordable housing can only happen through a strong partnership between the public and private sectors.

Jude Sannith S and Harini Sriram, Times Property, Chennai

Saturday 22 October 2011

Affordable housing: A route to dodge the downturn

India’s real estate sector last saw a boom in the five years from 2002 to 2007. The dream run of real estate ended in 2008 and the markets crashed. Since then, the real estate sector has not been able to recover. There have been spurts of growth for a few quarters but sustainable recovery is still elusive. Moreover, inflation and the global downturn played its own part in prolonging the slowdown.

Affordable housing

Out of sheer necessity to reduce prices in order to fuel demand, the idea of affordable housing is being discussed in real estate circles. Affordable housing is not low cost housing though these terms are confused very often. While low cost housing is targeted at economically weaker sections of the society, affordable housing is targeted at all types of buyers.

Affordable housing is a new growth area where builders and property dealers are focusing to spur demand for homes. Given that the slowdown in the real estate sector is here to stay, builders have no other option but to build homes that people can afford.

The numbers differ on what defines affordable housing. The most used numbers for affordable housing is anywhere between 3 to 5 years of net salary of an individual or family depending upon the economic growth and prevailing sentiments. Hence, if a person earns Rs 6 lakh net salary per annum, his or her capacity to buy a home is between Rs 18-30 lakh.

How this works

The purchasing power of all classes is determined and a value assigned on the basis of the location. Builders then try to offer properties within this range. This is called affordable housing.

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