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
