While private developers primarily target luxury, high-end and upper-mid housing segment, it is the housing requirements of the lower middle-income and lower income groups that are grossly neglected in India
Indian cities fall short of planned housing for low income and economically weaker households, resulting in a perennial and an ever-growing housing shortage, alongside compromised living conditions. Whilst this is detrimental to the planned growth of cities, it also gives birth to the demography of “less than equal citizens” forced to live in substandard clusters of slums, says a report.
In a report, “Affordable Housing in India”, real estate services firm Jones Lang LaSalle (JLL) India, said currently the country falls short by 26.5 million housing units. “Indian developers are primarily targeting luxury, high-end and upper-mid housing segment, with value housing being used only as a ‘saviour’ in the low phases of real estate cycles,” the report said.
According to estimates of the technical group constituted by the ministry of housing and urban poverty alleviation (MHUPA), during the 11th Five-Year Plan, the total housing requirement in Indian cities including backlog by end-2012 will be to the tune of 26.53 million dwelling units for 75.01 million households. If the current increase in backlog of housing is maintained, a minimum of 30 million additional houses will be required by 2020, the report added.
Availability of affordable housing in adequate numbers is one of the greatest necessities of urban India today. As per the 2011 Census, the country had a population of 1.21 billion, out of which, 377.10 million or about 31.2% lived in urban areas. The housing stock in urban India stood at 78.48 million for 78.86 million urban households, according to the census data.
“Urbanisation has resulted in people increasingly living in slums and squatter settlements and has deteriorated the housing conditions of the economically weaker sections of the society. This is primarily due to skyrocketing prices of land and real estate in urban areas that have forced the poor and the economically weaker sections of the society to occupy the marginal lands typified by poor housing stock, congestion and obsolescence,” the report pointed out.
Developing affordable housing in Indian cities faces significant challenges due to several economic, regulatory and urban issues. Whilst the lack of availability of urban land, rising threshold costs of construction and regulatory issues are supply-side constraints, lack of access to home finance is a serious demand-side constraint, which impacts the ability of low-income groups to buy housing in the organised sector. Whilst some of these are gradually being mitigated, concerted efforts are required by multiple institutions to facilitate mass development in this sector.
During 2009–2012, real estate developers have launched projects in the affordable segment across Indian cities, with units priced between Rs5–Rs10 lakh. Several of these projects have been sold on an application model due to huge demand, with multiple takers for the same unit.
With high prices of land within the city, the low-income housing projects are being developed at “leapfrogged locations”, which offer land parcels at suitable price points for such developments. Mumbai and the national capital region (NCR) have affordable housing projects located 65 km to 75 km from the city centre. On the other hand, Ahmedabad and Kolkata provide better proximity, with projects located at a distance of 15 km to 20 km from the city centre. Bangalore, Pune and Chennai also have projects after a distance of 25 km to 30 km from the city centre, the report said.
Estimated construction costs for low income housing
Whilst price of premium residential projects are largely guided by land costs, construction costs have a significant share in the price of affordable housing. If land is acquired at a reasonable cost of Rs150–Rs250 per sq ft, an affordable housing project with basic amenities (construction cost of Rs800–Rs1,000 per sq ft) would result in a minimum selling price of Rs1,400–Rs1,700 per sq ft. Thus, construction costs form nearly 50–60% of the total selling price for affordable housing.
On the other hand, luxury housing projects in South Mumbai have construction costs of nearly Rs4,000–Rs5,000 per sq ft, which is nearly 18–20% of the selling price of Rs20,000–Rs25,000 per sq ft. Affordable housing projects get more affected by rising costs of construction than premium projects. Hence, it becomes important that costs are minimised for construction of low-income housing whilst balancing the amenities provided as well as ensuring the safety and serviceability of the built structure during its lifecycle, the report added.
According to Monitor Inclusive Markets, the loan market of Rs3-Rs10 lakh is worth almost Rs11 lakh crore or around $220 billion. Despite this, majority of the loans disbursed by housing finance companies (HFCs) are to mid-income group (MIG) and high-income groups (HIGs) in a loan bracket above Rs10 lakh. The key issue that deprives people from availing housing loans in the Rs3-Rs10 lakh bracket is the perceived high risk i.e. apprehensions of loans turning into non-performing assets (NPAs) and uneven payment patterns. As per the ministry of labour and employment, 65%-70% of the workers in urban areas are employed in the unorganised sector. Since they are paid in cash and lack formal documents of identification, address and income, they remain underserved by HFCs.
Housing loan disbursals by HFCs
The present models on which affordable housing is being created to concentrate on the ability of people to buy. This model does not guarantee that the beneficiaries of such projects are the actual needy people or speculative investors, the report said.
Maruti Suzuki's total passenger car sales in June in the domestic market increased by 23.11% to 70,977 units from 57,653 units in the same month of 2011
New Delhi: The country's largest carmaker Maruti Suzuki reported 20.30% jump in total sales at 96,597 units in June.The company had sold 80,298 units in the same month last year, Maruti Suzuki India said in a statement.
In June, Maruti recorded domestic sales at 83,531 units, compared to 70,020 units in the year-ago period, registering a rise of 19.30%.
Similarly, Maruti's exports went up 27.13% to 13,066 units last month from 10,278 units in the year-ago period, the company said.
Total passenger car sales in the domestic market increased by 23.11% to 70,977 units from 57,653 units in the same month of 2011, it added.
Sales of the company's mini-segment cars, including the M800, A-Star, Alto and WagonR, fell by 10.44% to 34,198 units during the month from 38,183 units in June, 2011.
However, in the compact segment (comprising the Estilo, Swift and Ritz models), Maruti witnessed a 39.32% jump in sales to 22,624 units from 16,239 units in the same month a year ago.
Sales of Maruti's DZiRE model increased by over five-fold to 13,741 units in June from 2,486 units in the same month last year, it added.
Maruti's mid-sized sedan SX4 sales slipped 42.78% to 408 units last month from 713 units in June 2011.
Luxury sedan Kizashi witnessed 81.25% fall in sales at 6 units as against 32 units in the year-ago month.
A loyal Tata Cards customer and a former tata employee was unable to redeem his points due to ‘faulty’ EDC machines at Tata partner outlets. Instead, of solving the problem, Tata Cards deducted his rewards points and shows no signs of engaging with the customer
A Moneylife reader and former Tata Group employee has been using the Tata Credit Card as a primary card for six years and had accumulated significant number of reward points, and therefore wished to redeem some of the points earned. Apparently, there is no online interface for redeeming points for Tata Cards, and it has to be redeemed at a store. So, he tried to redeem at some Tata partner outlets in the Mumbai/Thane region in recent months, but was unable to do so. Some of the stores he visited were Croma (Mulund, Mumbai), Westside (Korum Mall, Thane), Tata DoCoMo brand store (Naupada, Thane) and World of Titan showroom (Naupada, Thane). He thereafter lodged a complaint on 17 March 2012 and was assured that his complaint would be resolved within seven working days. After a few days a representative claimed that that its rewards Electronic Data Capture (EDC) machines at the Tata partner outlets may have been temporarily 'faulty'. How would it be possible that several Tata rewards EDC machines were faulty at the same time? He had been facing the problem of redeeming his reward points since March 2012.
On the Tata Cards website, it was mentioned that it was 'easy' to redeem points. It said, "Swap your Tata Empower Card on a Tata EDC machine only for accrual of the reward points. Redeeming of the points is the easiest in the industry. Just walk to any Tata brand outlet, pick a product or products of your choice and redeem the points instantly. So, no calling to services, no visit to a website and no courier charges. It is simple, just earn it and burn it then and there." Yes, this is what mentioned on its website.
Rewards EDC machines are devices used by retailers when the merchant swipes the credit card through an electronic card reader or terminal in order to display the number of bonus/rewards points accrued and utilise it. The information on the card's magnetic strip is entered into the processor's database electronically and the information is promptly displayed.
Meanwhile, he was intimated by Tata Cards that his reward points accumulated till April 2012 points would 'expire' if not redeemed by 31 May 2012. Since the rewards EDC machines were 'faulty', he could not redeem it. Instead of trying to solve the problem, Tata Cards deducted the points that were to be expired. How could they do this?
Further, the e-statements of May 2012 and June 2012 intimated him of further 'expiry' of points if not redeemed by 30 June 2012 and 31 July 2012 respectively. If there are faulty rewards EDC machines, where's the question of redeeming? If Tata Cards was unwilling to help a loyal customer redeem his points, again, where is the question of redeeming? It is conveniently ignoring customers' grievances while mechanically deducting all the rewards points accrued. What is most pertinent is that it is doing this to a loyal customer who has worked with the Tata Group before. He had complained to all concerned including the head of Tata Cards, but all of them went unanswered. It is not known how many other Tata Cards customers are having the same problem. If you are one, let us know. Moneylife sent emails to Tata Cards to verify the story and received an automated reply from one generic id which replies to all customer complaints.