Affordable Housing Through PPP Model Case Example

1. Ramakrishna Nallathiga
Associate Professor,
School of Projects, Real estate and Infrastructure
Management
National Institute of Construction Management and
Research, Pune
Second Industry – Academia
Conference on Construction
Management (IACCM)
NICMAR – Hyderabad
Campus
July 27-28, 2018
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2. Structure
 Introduction
 Urban Housing Shortage
 Background
 Literature Review
 Shukhobrishti Housing Project
 Location
 Development model
 Development configurations
 Salient Features
 Shukhobrishti as Model of AH through PPP
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3. Introduction
 Housing is considered as an essential need of every
citizen, therefore, housing provision assumed an important
objective of all successive Governments in India.
 The National Urban Housing and Policy (NUHP) in India,
which came to the fore in 2007, emphasized on multi-
pronged approach towards housing in urban India.
 Apart from public house building, it emphasized upon
house building through partnerships between Central and
State governments as well as between the Government
and private sector so as to leverage private sector
participation in planning, execution and finance (GoI 2007).
 The Technical Group 12 of Government of India (Kundu
2012) also estimated that housing shortages were large
and rising (see Figure 1).
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4. Urban Housing Shortage
Estimates
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5. Background
 There were shifts in housing policy over time, which led to
current housing scenario in India (Nallathiga 2007):
 During 1960s, the focus was on house building, but most of it benefited
MIG rather than LIG/EWS households due to collusion;
 During 1970s, the policy emphasis was made on providing ‘sites and
services’, which was not very successful as LIG people sold them;
 During 1980s, the emphasis was made on ‘upgradation/ improvement’
of housing units and services, which met little success due to its
targeting;
 During 1990s, the housing policy in India envisaged the government to
move away from ‘direct provision’ towards ‘enabling it’;
 During 2000s, the successive governments gave incentives for home
ownership (through mortgage tax relief).
 After 2010, there is a focus on mass housing development by public
and private sectors, which pave the way for public-private partnership
(PPP)
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6. Literature Review
 Nallathiga (2005) points to rigid urban planning and development
control policies a hindrance to achieving housing policy objective
 KPMG NAREDCO (2013) note that although, the NUHP had
pronounced universal housing as the goal of housing and raised
pitch through ‘Housing for All’, there was not much enthusiasm at the
ground level for the numerous issues which need to be addressed,
as pronounced by the real estate and housing bodies.
 Industry advisories also showcased affordable housing as the next
thing to happen, but they also imply the need for support from the
Government to the developers by some means (JLL 2012).
 McKinsey (MGI) report (2014) discusses that affordable housing is a
major issue that required multi-pronged approach to address it.
 Sengupta (2014) also discusses the challenges and opportunities for
affordable housing in India through private sector participation.
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7. Shukhobrishti Housing Project
 The Shukhobrishti project is one of the largest mass
housing development projects in India. It was initiated by
the West Bengal Housing Infrastructure Development
Company (WBHIDCO), a Government owned company
that was set up for the state infrastructure development
with a focus on New Town, Kolkata.
 The Bengal Shapoorji Housing Development Pvt Ltd
(BSHDPL), a group company of Shapoorji Pallonji and
Company Pvt Ltd (SPCL), has been developing the
project by constructing low-cost housing units in New
Town Kolkata for 20,000 families.
 This development is primarily to cater to the housing
needs of Low Income and Middle Income Groups (LIG
and MIG) of households. At the end of this project, it is
expected house around 1,00,000 people in the township.
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8. Shukhobrishti Housing Project
 Shukhobrishti is a housing project spread over 60 acres of
New Town (Rajarhat), Kolkata, which is being developed
as a satellite city in 6,000 hectare area.
 The New Town Rajarhat is a satellite city developed in the
eastern outskirts of Kolkata to establish a new business
centre to reduce the mounting pressure on the existing
Central Business District (CBD) and increasing housing
stock supply by creating new residential units houses for
a population of 7.50 lakh from all income groups with
emphasis on housing for lower income groups.
 The State Government had entrusted the work of land
acquisition for the project to the West Bengal Housing
Board in April 1996, for this purpose they had constituted
a new body called the West Bengal Housing Infrastructure
Development Corporation (WBHIDCO).
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9. Shukhobrishti Housing Project
– Location on Map
Source: SPCL 9

10. Shukhobrishti Housing Project
– Development Model
 The Shukhobrishti project is conceptualised to be developed on
a Public – Private Partnership (PPP) model with the WBHIDCO
and the SPCL representing public and private sectors
respectively.
 BSHDPL is the SPV created for the execution of the project.
The project is based on the model of cross subsidizing the
development of MIG and LIG housing units with the utilisation of
some amount land outside the project area for commercial
activity.
 The WBHIDCO identified the private partner i.e. SPCL, through
a bidding process and gave the preferred bidder for the project
about 50 acres of land in the New Town at a below market price
to develop office-space for the IT/ITES industry (Chakrabarty
and Sarkar 2009).
 It had laid down condition on the contractor that one would not
wait to generate profits from space for IT/ITES industry before
starting the construction of housing units for LIG/MIG
households. Under Shukhobrishti project, both the
developments have to run concurrently.
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11. Shukhobrishti Housing Project
– Development Configurations
 The Shukhobrishti housing project consists of
‘Spandan’ and ‘Sparsh’, which are the two
residential complexes.
 Spandan consists of 1200 one bedroom housing
units on four floors without any lift/escalator facility.
 Sparsh has 8,000 two bed room housing units on 14
floors with lift/ escalator and parking facility.
 Besides the physical infrastructure for housing
units, this township housing project has all
major community infrastructure services/
amenities like healthcare centre, primary
school, shopping complexes including public
institutions like banks post offices etc.
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14. Shukhobrishti Housing Project:
Salient Features
Conformity to Affordable Housing Definition
 The housing units developed under
Shukhobrishti project conform to the definition
of affordable housing laid down by Deepak
Parekh Committee Report on Affordable
housing (GoI 2008).
 Deepak Parekh committee had laid down
norms for terming affordable housing for
LIG/EWS and MIG households based on
(Nallathiga 2010):
 the size of dwelling unit and
 the cost/rent of it as a share of household income.
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15. Shukhobrishti Housing Project:
Salient Features
Target Beneficiaries
 The Shukhobrishti project is essentially aimed at providing
affordable housing units for LIG and MIG households with
premium amenities like that of large townships.
 Initially (during Phase I to III), it provided LIG and MIG-L units at
Rs 3 lakh and 6 lakhs respectively. Subsequently, with the rising
costs of construction, it began to offer the housing units in the
price range of Rs 4.5 to 9 lakhs for 1 BRK and 2 BRK units in
Phase IV of the project.
 In the recent years, it offered 1 BRK and 3 BRK housing units at
a price of Rs 6 lakhs and Rs 15 lakhs for LIG and MIG-U
sections under Phase VI of the project (BSHDPL 2016).
 The income eligibility of households has also kept rising
from the ceilings of Rs 1.8 lakhs, Rs 3 lakhs and Rs 4.8
lakhs respectively for LIG, MIG-L and MIG-U laid down
initially to the ceilings of Rs 3.6 lakhs, Rs 6.0 lakhs and
Rs 9.6 lakhs respectively in the recent years.
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16. Shukhobrishti Housing Project:
Salient Features
Allocation Process
 Given the cost advantages and premium amenities of
development, there is a greater demand for such
affordable housing units. The application forms for
allotment get exhausted in little or no time. Also, the
response from eligible households in terms of application
submission is large and pours in.
 Therefore, the allocation of housing units to the eligible
beneficiaries is done through a lottery system. The
enthusiasm for the project is evident from more than
65,000 people attending the lottery conducted for 400
MIG flats in Phase III of the project (Maxinfo 2014).
 In the subsequent phases, the number has reached to the
multiple of few lakhs of applications for a sum-total of few
thousands of housing units.
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17. Shukhobrishti Housing Project:
Salient Features
Home Finance
 Home financing is done by major housing finance
companies like the HDFC, SBI Home Finance, LIC
Housing Finance etc.
 In order to cater to the needs of poor people who
have no access to commercial banks, the Micro-
Housing Finance Company (MHFC), Kolkata also
began to provide financial assistance to the eligible
households in LIG segment.
 The purpose of the loan should be for the purchase
of residential house in the project for self use. The
MHFC, Kolkata gives home loan up to a maximum of
Rs 10 lakhs with a maximum tenure of 15 years and
the annual interest rate varying between 12% and
14%.
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18. Shukhobrishti Housing Project:
Salient Features
Project Marketing
 The SPCL kept consumer in mind and marketed in a tag line
“blend of modernism and true essence of Bengal”. It reaches
out the potential customers through its own website and news
papers.
 The Bengal Shapoorji Housing Development Pvt. Ltd had set up
a call centre for this purpose. The project also has been
responding to the demand by changing the composition of units.
 It also gives the complete details of the community infrastructure
and amenities provided in the housing township. The project
also received several awards for the innovative housing product
and professional output e.g., India Realty (2014).
 It also received investment support from the International
Finance Corporation for its innovative model (Livemint 2015).
The Government of West Bengal considers this as a ‘jewel of
crown’ project to attract private investments.
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19. Shukhobrishti Housing Project:
Salient Features
Unique Selling Proposition
 The unique feature of this model is that it is able to
provide good quality of construction which is more than
regular affordable houses.
 Besides, various amenities like swimming pools, fitness
clubs, entertainment centre etc are provided. The houses
are unique and well designed which gives pride for
owners.
 The total housing complex resembles a gated community
with security guards in uniform and closed circuit cameras
for monitoring. It has 37,162 square meters of shopping
complexes of retail market, malls and post offices.
 The residents work in the central part of Kolkata, they use
the public transportation bus which reduces the cost of
commute. This provides a good eco system all together.
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20. Shukhobrishti as a Model for
Affordable Housing
 Shukhobrishti kind of housing projects can be taken up in all
major cities like the Mumbai Metropolitan Region (MMR), the
National Capital Region (NCR), Chennai, Hyderabad,
Ahmedabad, Bengaluru and Pune. These are some of the major
urban centres in India that need an affordable housing push.
 Shukhobrishti project provides quality affordable housing for
urban poor and middle class. This is not possible unless the
subsidy is used from the creation of high income generating
business, which is case when a satellite city is near to large city.
 Even though the project caters to the needs of LIG, many are
left behind which questions us if this model would be sufficient to
address the demand of housing from LIG.
 Suitability for all locations, the lifestyle and consumer taste.
 Cross subsidy spent properly for the beneficiaries
 Reach out/ access to credit from commercial banks.
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21. Thank You !!!
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