The Growing Market of
Affordable Housing
About two crore low-income houses will be built in the next seven years
The Next Big Thing: (from left) Ravindra Sudhalkar, ED & CEO, Reliance Home Finance, Anita Arjundas, MD & CEO, Mahindra Lifespaces, Huzefa
Dehgamwala, Director, Ambit Corporate Finance (moderator), DS Tripathi, MD & CEO, Aadhar Housing Finance and Ujjwala Haware, chairperson,
Haware Engineers and Builders
A
ffordable housing is a
huge opportunity for
realtors and housing
finance companies
alike, waiting to explode with an
estimated market size of `20 lakh
crore.
Discussing the prospects and
issues related to affordable housing
on the second day of Outlook
Money Conclave in Mumbai was
a motley panel of experts from the
housing finance business and realty
sector. They included Ravindra
Sudhalkar, ED & CEO, Reliance
Housing Finance Ltd., Anita
Arjundas, MD & CEO, Mahindra
Lifespaces, Ujjwala Haware,
Chairperson, Haware Engineers and
Builders Pvt Ltd and Deo Shankar
Tripathi, CEO, Aadhar Housing
Finance Ltd.
Defining the opportunity,
Aadhar Housing’s Tripathi said:
“About two crore houses are to be
done in the next seven years for
the economically weaker sections
(EWS). Assuming `10 lakh to be
the average cost of each house, the
requirement is of `20 lakh crore.
At 80 per cent loan to value ratio,
this translates to a home loan
requirement of `16 lakh crore.”
Land prices
The panel of experts felt that
reasonable land prices, connectivity
to workplace, besides the availability
of social infrastructure such as
roads, electricity as well as water
connections and drainage were
the key factors for the successful
execution of affordable housing
projects in India.
“Location in affordable housing
is even more important than in
other categories,” said Arjundas of
Mahindra Lifespace Developers.
“Cost of land should not exceed
10-15 per cent of the selling price of
the flat. Beyond that, the economics
won’t work,” added Arjundas.
Speaking about the affordable
housing development in Navi
Mumbai, Haware said: “City
and Industrial Development
Corporation of Maharashtra
(CIDCO) did a wonderful job of
keeping the social infrastructure
ready. With roads, drains, electricity
and water supply easily available,
we immediately gave possession
of these affordable flats to the
economically weaker sections
such as house helps, auto rickshaw
drivers and vegetable vendors.”
Hub and spoke
The hub and spoke model is being
widely used by housing finance
companies. “We have 51 offices
serving 100 locations. Once
business from a location reaches a
particular size, we open an office
there,” said Sudhalkar of Reliance
Housing Finance.
“These are small offices manned
by six or seven employees situated
at the periphery of cities where
affordable housing projects come
up. It takes us closer to our clients,
besides reducing the cost of
sourcing business,” Sudhalkar said.
[email protected]
www.outlookmoney.com April 2018 Outlook Money
55