Low-cost homes: too far and no time limit for possession
Following in the footsteps of Tata Group and Unitech, the Future Group has also entered in to affordable or low-cost housing projects. Future Group's unit FH Residencies has formed a joint venture with Kolkata-based developer Sumit Dabriwal, for building affordable, branded, ready-to-move-in homes.

Kishore Biyani, founder and chief executive, Future Group said it intends to be a Rs130 billion company by 2011 and the foray into building ready-to-move-in houses is part of the plan. The company has yet to work out the pricing strategies, but it would be affordable.

This is a national tie-up with Sumit Dabriwal and the target buyers would be young, working class, who are pressed for time, so we would take care of everything needed for a home, Biyani said. One more cash rich group entering into low-cost housing project is good news, but there are some concerns about the theme itself. In his recent letter to shareholders, Deepak Parekh, chairman, Housing Development Finance Corp (HDFC), said: "Affordable housing is not about box-sized, budget homes in far-flung places where there is no connectivity to work places and little surrounding infrastructure. Affordable housing has to be able to cut across all income segments and has to make economic sense in terms of proximity to the work place. The agenda for affordable housing requires combined public-private collaboration and a strong political will to enforce change."

Developers have recognised that the real demand no longer lies in the premium segment and are therefore opting to build smaller, no-frill apartments. 'Affordable housing' is suddenly in vogue. But this is a bit of a misnomer. Some correction in prices has happened, developer margins have come off, but real estate prices are still high, he added.

An industry associate has suggested the government and realty players should jointly undertake low cost housing projects in rural areas where shortage of houses is estimated to be more than 47.43 million up to 2012.

Developers are now reintroducing one-bedroom apartments, which seemed to have disappeared from the market. Further, with interest rate reduction, many who were earlier out-priced are now able to come back into the housing market. While these developments are positive, the real agenda for affordable housing has still not been brought to the table, Parekh said.

Talking about the shortage in affordable urban land, Parekh said the inability to adjust land policy with the changes in demand and supply conditions has led to serious shortages of urban land at affordable prices, encroachments on public and private lands, irrational land use and absence of spatial plans in cities.

The total urban land stock in India is only 2.3% of the country's total geographical area, but houses 30% of the country's population.

Parekh said there is a need to bring in additional urban land on a regular basis through a policy change and the floor space index (FSI) should be increased at the same time urban infrastructure should also be upgraded.

Talking about the role of housing boards in the development of houses, the HDFC chairman said although some state housing boards are performing their duties, in recent period many of them have shifted their focus to merely selling land for profit and sitting on cash surpluses. Such profits should be mandatorily ring fenced and deployed only for affordable housing, he added.

Separating challenges of urban housing from rural housing, Parekh said the government need to go for key reforms like permitting the mortgage of agricultural land for residential purposes and introducing title insurance which could give the much-needed thrust to rural housing.

There is such a compelling need for state level real estate regulators whose role would be to oversee and monitor the affordable housing agenda, promote real estate reforms, ensure transparency especially by mandating that flats be sold only based on carpet area and most importantly, act as a platform to protect buyers from real estate fraud, the HDFC chairman said. -Yogesh Sapkale [email protected]

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