This document provides an overview of the affordable housing market in India and discusses whether there is a business case for real estate developers to participate. It notes that while India has a massive need for affordable housing due to rapid urbanization and population growth, developers have been hesitant to enter the affordable housing sector due to challenges such as a lack of available urban land, high construction costs, and regulatory hurdles. The government has introduced initiatives like the Pradhan Mantri Awas Yojana and tax incentives to encourage affordable housing development, but limitations remain such as projects being located far from jobs and amenities. The document examines these opportunities and barriers within the affordable housing segment in India.

1. Is There A Business Case For Developers On
Affordable Housing Project?
Darsh Parekh | Mohan Choudhary | Bharat Sinha | Bharat Kachhani | Sanket RathiPresented by:

2. EXECUTIVE SUMMARY
• Over the last few years, India has emerged as one of the global investment hotspots. The trend has further
gained momentum in the post crises environment, with the ongoing rebalancing of global activity from the
west to the east.
• While most sectors in India hold promising potential, infrastructure is particularly compelling. The
potential for infrastructure is essentially because of the massive need for infrastructure development in
the country, as India continues to march ahead on the road of fast-paced economic growth. When these
high levels of economic activity are combined together with other factors like rapid urbanization, rising
disposable incomes, and an enormous population base eager to improve their lifestyle, the need for
housing becomes obvious.
• Today Real estate developers in India, like everywhere else, are faced with liquidity problems. The
weakness of their business model, where construction activities are financed primarily by collections from
advance bookings came to the fore, as real estate sales volumes dipped. Forced by this challenging
business environment, homebuilders in India turned towards a product of better mass appeal – affordable
housing.
• This presentation analyzes the Indian affordable housing market, and attempts to identify and underscore
opportunities in this segment.

3. SO WHAT IS AFFORDABLE HOUSING?

4. • Affordable housing is very generic, affordable housing refers to residence especially designed for “economic
weaker section” (EWS) and lower income group (LIG).
• Affordable housing became a key issue in india where a majority of the population isn’t able to buy houses
at the market price.
• The classification of EWS AND LIG, as per the credit link subsidy scheme in the Pradhan Mantra Awas Yojana
(PMAY)
EWS : income up to Rs 3 lakh/annum
LIG : income from Rs 3 lakh to 6 lakh/annum
• Affordability of an individual is also calculated on the basis of 30% of the annual income . budget 17-18
defines the affordable housing unit should be up 30 sqm for the EWS and up to 60sq.m for LIG.
SO WHAT IS AFFORDABLE HOUSING?

5. NEED OF AFFORDABLE HOUSING
“Urbanization and housing reveal a nation’s economic growth and social wellbeing. India’s urban
population is growing at an average 2.1% every year since 2015. It is likely to reach 60 crore by 2031
(up from 37.7 crore today). But the growth in housing has been unable to keep pace. Currently, the
housing shortage in India is close to 1.9 crore units. The economically weaker sections (EWSs) and
lower-income groups (LIGs) account for 96% of the urban shortage. “
EWS
56%
LIG
40%
MIG AND ABOVE
4%
Category No. (in Millions) In Percentage
EWS 10.55 56.18
LIG 7.41 39.44
MIG AND ABOVE 0.82 4.38
TOTAL 18.78 100
Source: Report of the Technical Group On Urban Housing Shortage (TG-12)
Distribution of housing shortage among different economic
categories as on 2012.

6. PRADHAN MANTRI AWAS YOJANA (PMAY)
Under the Pradhan Mantri Awas Yojana (PMAY), the main proposal
was to construct 20 million homes for the those people belonging to
the Low Income Families and Economically Weaker Sections in the
identified urban and semi urban areas by 2022.
• Building and/ or enhancing the houses led by legatees.
• Reasonable housing via Credit Linked Grant.
• In-situ Slum Redevelopment with private sector participation
using land as resource.
• Affordable housing in association with private and government
funding registration is mandatory to avail the benefits of this
scheme which includes the strict beneficiary names to be
mothers or wives.
• Subsidy interest rate is provided at 6.5% on housing loan for the
term of 15 years to all the beneficiaries.

7. PPP MODELS FOR AFFORDABLE HOUSING
• PPP Models On Government Land
1. Government-land Based Subsidized Housing (GLSH)
2. Mixed Development Cross-subsidized Housing (MDCH)
3. Annuity Based Subsidized Housing (ABSH)
4. DBFMT Annuity cum Capital Grant based Subsidized Housing (AGSH)
5. Direct Relationship Ownership Housing (DROH)
6. Direct Relationship Rental Housing (DRRH)
• PPP Models On Private Land
1. Private land based Subsidized Housing in Association with PMAY (U) (CLSS Scheme for EWS/LIG/MIG)
2. Private Land Based Models under AHP scheme

9. WHY ARE DEVELOPERS NOT OPTING FOR AFFORDABLE HOUSING?
BIG QUESTION
THE

10. Lack of Availability of Urban Land
Rising Threshold Costs of Construction
Lack of Access to Home Finance for
Low-Income Groups
Lengthy Approval and Land Use
Conversion Process
Regulatory Constraints
Titling Issues and Lack of Information

11. LIMITATIONS IN AFFORDABLE HOUSING
1. Most of these projects are located on the outskirts of cities and in far off areas. So, the
absorption in these projects could remain low, despite the demand for affordable housing.
2. Buyers still prefer central areas, even though they may have to compromise on the size of the flat.
3. The present slowdown in the market, could affect the sales in these projects. Thus, even if the
developer completes the project, subsequent occupancy may remain a challenge.
4. While the units in an affordable housing project are cheaper, than those in the mid-income and
premium housing segment, most upcoming affordable projects may not provide the basic
amenities on account of their location.
5. A majority of these projects are being launched in remote areas, where the development firms
get land at cheaper rates. Most of these areas still lack basic social infrastructure.

12. LIMITATIONS IN AFFORDABLE HOUSING

13. GOVERNMENT INITIATIVES IN AFFORDABLE HOUSING
1. Affordable Housing has been given “infrastructure” status and that would give developers access
to cheaper source of funding.
2. 100% deduction in capital expenditure incurred for affordable housing development.
3. Project completion period has been extended from 3 years to 5 years.
4. Relief of Notion Tax for unsold inventory for 1 year financial period post receipt of completion
certificate.
5. Holding period w.r.t long term capital tax reduced from 3 years to 2 years.

14. ThankYou
Be The Solution, Not The Pollution.