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AFFORDABLE HOUSING IN INDIABRINGING BHARAT TO INDIA

APRIL 2017

AHMEDABAD • BENGALURU • CHENNAI • GURGAON • HYDERABAD • KOLKATA • MUMBAI • NOIDA • PUNE


1April 2017

EXECUTIVE SUMMARY

Urbanisation and the ever-growing demand for housing have become a familiar feature

of the Indian society. As per 2011 census data, India’s urban population increased at a

compound annual growth rate (CAGR) of 2.8 per cent over 2001-11, resulting in an

increase in the urbanisation rate from 27.8 per cent to 31.2 per cent during the same

period. According to the McKinsey India Awakening Report (2010), the urbanisation rate

of India is expected to reach 40 per cent by 2030 from 30 per cent in 2008. With this in

mind, the Government of India acknowledges the importance of the housing issue in the

country and has set the mammoth goal of providing housing to all Indian citizens by

2022.

Housing for all by 2022 is a development imperative. It is also one of the best ways to

catalyse growth and boost investor sentiment. In addition, with the government’s

initiative to open up new urbanised areas with the Smart Cities Mission, the housing

demand should be sustainable.

The Central Government's initiative to ‘Curb black money’, ‘RERA’, lowering of interest

rates and Pradhan Mantri Awas Yojana, would result in a reset of the Real Estate sector

and beginning of a new era of cashless real estate economy. This will further help in

generating positive sentiments for the residential real estate sector and will give a sharp

boost to achieve the objectives of Pradhan Mantri Awas Yojana. During the period from

Q3 FY’16 to Q3 FY’17, the segment contributed more than 50 per cent to the total

residential sales across India.

Wagholi, Undri and Moshi in Pune, Dombivali in Mumbai and Techzone 4 in Noida

emerged as top-5 a�ordable localities in India based on the total number of a�ordable

units sold during last 12 months.

The announcement of a�ordable housing segment being given infrastructure status in

FY 2017-18 budget will result in increased participation from private players. The other

announcements made in the Union Budget such as increase in timelines for completion

of a�ordable housing projects from 3 to 5 years, tax relief on buildings which are

stock-in-trade, capital gain benefits in case of joint development agreements and larger

area of a unit eligible for a�ordable housing benefits will give a boost to a�ordable

housing in India.


2

Introduction

Defining A�ordable Housing

Urbanization: Need for A�ordable Housing

A�ordable Housing in India: The Current Scenario

A�ordable Housing Landscape: Upcoming Localities

Policy Boost & Incentives: Central Government

Policy Measures: State Governments

Private Participation in A�ordable Housing

A�ordable Housing: Opportunity

A�ordable Housing: Drivers and Restraints

A�ordable Housing: Way forward and what needs to be done

3

4

6

7

12

20

22

23

24

24

25

TABLE OF CONTENTS

April 2017


3

INTRODUCTION

The residential real estate sector in India is complex, but it plays a significant role in the country’s economic

development. The key demand drivers for India’s residential sector have been sustained economic growth, rapid

urbanization, improvement in employment scenario and increased disposable incomes. In addition, the availability of

easier and flexible financing options, amid an increasing number of private players, have supplemented the

residential supply in the country.

The increase in population, along with rapid

urbanization, has made a strong case for

increasing housing supply. This, in turn, has led

to the launch of numerous residential projects

across cities in the recent past. However, the

una�ordability of these projects has often been

cited as one of the major reasons why most

cities in India are reeling under the pressure of

rising unsold inventory. Because of this

demand-supply mismatch, developers have

been looking at the a�ordable housing

segment. The Government has identified this

gap and has given infrastructure status to the

a�ordable housing segment to increase

participation from private players. Government

has also announced many policies, schemes

and regulations to achieve its goal of providing

housing for all its citizens with acceptable

standards of living by 2022. In this context, the

State governments have been proactive in

introducing state-specific policies to boost the

sector. Gujarat, Haryana, Maharashtra, Andhra

Pradesh, Rajasthan and Odisha have led from

front.

The report ‘A�ordable Housing in India-Bringing Bharat to India’ delves into the current status, regulatory ecosystem,

current challenges and the leading localities in this segment, and assesses the opportunity that lies there.

April 2017


4

DEFINING AFFORDABLE HOUSING

Traditionally, per capita disposable income has been a key factor in determining a�ordability and defining a�ordable

housing units as those that are a�ordable to the population with income below the country’s average household

income. Di�erent countries have di�erent definitions for a�ordable housing, but in India a�ordability of a project is

defined using parameters such as size and price of the dwelling unit, minimum basic amenities, target segment and

income group, availability of finance and the ratio of Equated Monthly Installment (EMI) to monthly income. Given the

widespread social appeal of this segment, the development and regulatory agencies such as RBI and The Ministry of

Housing and Urban Poverty Alleviation (MHUPA) have given detailed definition of a�ordable housing as given below:

Note: SBUA stands for Super Built-Up Area

Prior to July 2014, RBI defined a�ordable housing on the basis of loans given by banks to individuals for purchase or

construction of dwelling units – up to Rs. 25 lacs in metros and Rs. 15 lacs in non-metros. According to RBI’s revised

definition of 2014, the cost of a�ordable residential property should be less than Rs. 65 lacs in metro cities of India,

and Rs. 50 lacs in non-metros.

The Ministry of Housing and Urban Poverty Alleviation (MHUPA) defined a�ordable housing on the basis of size of

the dwelling unit, price, a�ordability and income as shown below:

The Reserve Bank of India (RBI)

The Ministry of Housing and Urban Poverty Alleviation (MHUPA)

Type SBUA (sq.ft.) Price Range EMI (Rs.)

Economically Weaker

Sections (EWS)

Lower Income Group (LIG)

Mid Income Group (MIG)

300 - 500

500 - 600

600 - 1,200

< Rs. 5 Lacs

Rs. 7 - 12 Lacs

Rs. 12 - 50 Lacs

4,000 - 5,000

5,000 - 10,000

10,000 - 30,000

Ratio of House Price to Annual Household Income

While there is consensus on defining a�ordable housing through parameters of dwelling unit sizes, price and income

criteria, it is equally important to incorporate basic amenities and distance from employment hubs to make the

definition all encompassing. As per PropTiger assessment, the a�ordable housing projects can be defined based on

combination of various factors and their respective ranges as below:

A�ordable Housing – Need for Redefinition

2 - 3

3 - 4

4 - 5

April 2017


5

Target Groups

Includes, EWS, MIG and

other low cost units

Less than Rs.50 Lacs

Less than 25 kilometers

• Adequate sanitation

• Water supply and Power

• Parks, basic shopping and

healthcare facilities in the vicinity

• Adequately connected to public

transportation

300 to 800 sq. ft.

Equated Monthly Installment (EMI) of Rs. 4,000

to Rs. 40,000 per month for house loan

Ratio of house price to

household annual income

should be in the range

of 2 to 5

Price of the HousePrice of the House

Distance from Employment Hubs

Size of the Dwelling Unit

Income

A�ordability

A�ordable HousingKey Vectors

Figure 1: A�ordable housing key vectors

April 2017


6

URBANIZATION: NEED FOR AFFORDABLE HOUSING

According to the 2011 census, India has a population of about 1.2 billion, and about 31.1 per cent of the total

population resides in urban areas. According to the McKinsey India Awakening Report (2010), the urbanization rate

of India is expected to reach 40 per cent in 2030 from 30 per cent in 2008 (as shown in Figure 2 below). Increasing

population and rapid urbanization resulted in a significant shortage of housing across cities in India. According to the

National Housing Board (NHB), the housing shortage in urban areas of the country in 2014 touched 18.78 million

units; 95 per cent of this shortage was among the economically low-income groups of the society.

2001 2008 2030

28%

1991

26%

30%

40%

50%

40%

30%

20%

10%

Increasing urbanization is one of the major factors in increase in residential demand in a�ordable segment

Source: McKinsey India Awakening Report, 2010, PropTiger DataLabs

Source: McKinsey India Awakening Report, 2010, PropTiger DataLabs

856

1,040 1,155

1,470

26%28%

30%

40%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

-

200

400

600

800

1,000

1,200

1,400

1,600

1991 2001 2008 2030 (Estimated)

Urb

an

isa

tio

n R

ate

(%

))s

noilli

m ni(

noit

alu

po

P

Year

Population (Millions) Urbanisation Rate

Figure 3: Population growth and urbanization rate in India

Figure 2: Urbanization rate in India

April 2017


7

AFFORDABLE HOUSING IN INDIA: THE CURRENT SCENARIO

India’s urban population has increased at a compound annual growth rate (CAGR) of 2.8 per cent over 2001-11,

resulting in an increase in the urbanization rate from 27.8 per cent to 31.2 per cent during the same period, according

to the Census 2011 data. In this context, the Centre and State governments acknowledged the importance of

accommodating the growing population with acceptable standards of living, and announced many policies, schemes

and regulations to achieve the mammoth goal of providing housing for all Indian citizens by 2022.

Index Base Period: Q3 FY’15

Note: * Top-9 cities are Mumbai (includes Navi Mumbai & Thane), Pune, Noida (includes Greater Noida & Yamuna Expressway), Gurgaon

(includes Bhiwadi, Dharuhera & Sohna), Bengaluru, Chennai, Hyderabad, Kolkata and Ahmedabad.

Figure 4: Launch of a�ordable housing units across India’s top-9* cities

Source: PropTiger DataLabs Dec 2016

April 2017

59%

65%

53%

60% 59%55% 56%

61% 60%

100.0 109.3

67.3 64.7

90.7

66.1

56.6 56.9

43.3

0.0

20.0

40.0

60.0

80.0

100.0

120.0

0%

10%

20%

30%

40%

50%

60%

70%

Q3 FY'15 Q4 FY'15 Q1 FY'16 Q2 FY'16 Q3 FY'16 Q4 FY'16 Q1 FY'17 Q2 FY'17 Q3 FY'17

% o

f uni

ts

% Share of Affordable Units to Total Launches Affordable Launch Index

Affo

rdab

le L

aunc

h In

dex

Valu

e

The global liquidity crisis of 2008-2009 was instrumental in bringing private players into the a�ordable housing

segment. Since 2009, many developers in the country have launched several a�ordable projects across top cities.

Sensing a huge demand-supply gap, leading corporate groups have also ventured into this space. The segment

continued to account for over 50 per cent of total sales till Q3 FY’17. Over the past 12 months, Bengaluru, Noida, Pune

and Gurgaon have displayed a larger appetite for a�ordable housing units, with sales in these cities surpassing

launches during the period.


8

Typically, domestic buyers in the low- and mid-income groups working in manufacturing units, educational institutions

and PSUs, and junior to mid-level executives working in IT/ITeS and BFSI sectors are driving the demand for

a�ordable housing. While the developers’ response to meet this demand has not yet been fully adequate, the

a�ordable segment has continued to maintain its share of more than 50 per cent in total residential launches across

top nine cities of India. Launches across all segments have seen a declining trend due to reduced participation of

developers. However, the share of a�ordable units in overall launches has seen an increasing trend since Q4 FY’16

on account of attractive policy announcements for the a�ordable segment in the Union Budget of 2016-17.

Figure 5: Sale of a�ordable units across India’s top-9* cities


Note: * Top-9 cities are Mumbai (includes Navi Mumbai & Thane), Pune, Noida (includes Greater Noida & Yamuna Expressway), Gurgaon



The a�ordable segment continued to have a higher share in total residential sales across top nine cities in India.

During the period from Q3 FY’15 to Q3 FY’17, while the segment witnessed a sharp decline in sales, it continued to

contribute more than 50 per cent to the total residential sales across India.

On an overall basis, Pune has emerged as the top city with an average age of inventory and inventory overhang of

25 months as on Dec’16. Inventory overhang in Bengaluru, Hyderabad, Pune and Kolkata has been in a healthy range,

indicating that demand is moving in tandem with supply. In cities such as Ahmedabad, Chennai, Gurgaon, Mumbai

and Noida, on the other hand, the inventory overhang is more than 45 months. In Ahmedabad, around 28 per cent of

the inventory in the a�ordable segment has been fully constructed and provides a larger universe of

ready-to-move-in options for the a�ordable segment buyer.

April 2017

59% 60% 58% 57% 59%55% 53% 53% 55%

100.0 100.4

91.182.6

93.9

80.671.9

65.9

51.2

0.0

20.0

40.0

60.0

80.0

100.0

120.0

0%

10%

20%

30%

40%

50%

60%

70%


% o

f uni

ts

% Share of Affordable Units to Total Sales Affordable Sales Index

Affo

rdab

le S

ales

Inde

x Va

lue


9

Figure 6: Age of unsold inventory vs inventory overhang in a�ordable segment in top-9* cities

Prices of a�ordable housing units have steadily increased over the past two years on account of consistent demand.

The magnitude of price increase was relatively high in cities such as Bengaluru, Hyderabad and Pune, as shown in

Figure 7. The demand for a�ordable housing could gain further momentum in the medium term on the back of several

incentives announced in Union Budget FY 2017-18. In addition, the falling repo rate is expected to provide the

feel-good factor for end users. The prices are likely to increase, albeit in a range-bound manner, in cities such as

Pune, Bengaluru, Hyderabad, Kolkata and Mumbai, due to an increase in demand and relatively low inventory

overhang.

Figure 7: Weighted average* price index of a�ordable units in top-9 cities


Source: PropTiger DataLabs Dec 2016Notes: Figures have been approximated to nearest 100

* Top-9 cities are Mumbai (includes Navi Mumbai & Thane), Pune, Noida (includes Greater Noida & Yamuna Expressway), Gurgaon


April 2017

100101

102 102 103103

104 105

99

96 97 97 97

100 102

105106

110

100100 100 100

10099 9999

9998 98 97

98

104

90

92

94

96

98

100

102

104

106

108

110

Q3FY'15

Q4FY'15

Q1FY'16

Q2FY'16

Q3FY'16

Q4FY'16

Q1FY'17

Q2FY'17

Q3FY'17

Ahmedabad Bengaluru Chennai Gurgaon Hyderabad Kolkata Mumbai Noida Pune

Ahmedabad28,000

Bengaluru37,200

Chennai25,900

Gurgaon21,900

Hyderabad12,800

Kolkata27,700

Mumbai78,200

Noida54,000

Pune59,300

15

20

25

30

35

40

45

50

55

0 20 40 60 80 100 120 140 160 180

Age

of U

nsol

d In

vent

ory

(Mon

ths)

Inventory Overhang (Months)


Note: * Price weighted on number of units supply in respective projects in city


10

The attractiveness of an a�ordable housing location hinges on its proximity to economic hubs and city centres. In line

with our definition of a�ordable housing, these projects should be in close proximity to major business hubs. Our

analysis reveals that the upcoming a�ordable housing localities in cities such as Ahmedabad, Bengaluru, Gurgaon,

Noida, Chennai and Hyderabad are typically 20-30 kilometres away from their respective city centres whereas,

a�ordable localities in Mumbai and Pune are around 30-60 kilometres from their respective city centres.

‘AFFORDABLE’ DISTANCE

Figure 8: Distance of major a�ordable housing locations from city centres

City Ahmedabad Bengaluru Chennai Gurgaon Hyderabad Kolkata Mumbai Noida Pune

City Centre Vastrapur MG Road Nungambakkam DLF Cyber City Banjara Hills Park Street Nariman Point Sector 18 Kalyani Nagar


April 2017

0

10

20

30

40

50

60Ahmedabad

Bengaluru

Chennai

Hyderabad

KolkataMumbai

Pune

Gurgaon

Noida

Varthur

Manikonda

Kompally

Chandkheda

Vaishodevi Circle

Wagholi New TownSonarpur

Dombivali

Karanjade

Begur UrapakkamWest

Tambaram

Undri

Kengeri


11

Ranking Methodology

The study is limited to apartments in the price range of less than Rs. 50 lacs. The rankings are based on the total number

of a�ordable units sold during Jan’16 – Dec’16

AFFORDABLE HOUSING LANDSCAPE: TOP PERFORMERS OF JAN’16 - DEC’16


Out of top 20 performing localities in India, 9 are from Pune and 4 are from Mumbai

Figure 9: Top performing localities

April 2017

DELHI/NCR

AHMEDABAD

MUMBAI

PUNE

KOLKATA

BENGALURU

4. Techzone 4, Noida9. Sector 1, Noida Extension19. Sector 103, Gurgaon

10. Gota

6. New Town14. Uttarpara Kotrung

18. Hoskote

2. Dombivali8.Badlapur East11. Neral17. Bhiwandi

1. Wagholi3. Undri5. Moshi7. Talegaon Dabhade12. Hinjewadi13. Dhayari15. Chikali16. Chakan20. Pirangut

12

AFFORDABLE HOUSING LANDSCAPE: UPCOMING LOCALITIES

April 2017

13


Ahmedabad is known as the ‘Manchester of the East’, primarily because of the contribution of manufacturing and

pharmaceutical players like Adani Group, Arvind Mills, TATA, Cadila Pharma and Torrent Pharma. The residential

market of Ahmedabad has seen moderate growth in the past few years, spurred by a growing local economy,

infrastructure developments and high demand from end users.

AHMEDABAD

Located centrally between Ahmedabad and Gandhinagar on the National Highway, in proximity to SG highway,

International Airport (20 Kms) and Sardar Patel Ring Road

Vaishno Devi Circle on SG Highway and Chandkheda

The proposed Motera-APMC metro link, to be operational by 2019, is likely to boost demand and prices in the

region

Excellent connectivity with GIFT City, in close proximity to developed commercial hubs

Upcoming A�ordable Localities

Figure 10: % share of a�ordable launches and absorption in Ahmedabad in total Ahmedabad

Vaishno Devi Circleon SG Highway

Chand Kheda

Figure 11: Weighted average price index of a�ordable units for key localities in Ahmedabad

Strong/Marginal decline Stable Marginal/Strong increase

A�ordable Housing Locations

PropTigerLivability Score

Price Range (Rs per sq.ft.)

SuburbLocality

Vaishno Devi Circle On SG Highway

SG Highway 2,800 - 2,950 7 . 7

Chandkheda Ahmedabad North 2,300 - 2,400 9 . 8

12-Month Demand Outlook


80%

61% 63%

72%

55%

68% 68%

83% 77%76% 76% 75%72%

69% 66% 68% 68% 65%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%


Launches Absorption

100

102 102 102 102 102

98100

9999

98 98

100

103

105 105104

104 105

96979899

100101102103104105106


Ahmedabad Chandkheda Near Vaishno Devi CircleOn SG Highway

April 2017


Bengaluru, the capital city of Karnataka and the state’s largest city, is popularly known as the ‘Silicon Valley of India’.

Bengaluru has experienced rapid growth and international recognition in the field of information technology (IT) and

software development.

BENGALURU

Varthur: Located strategically between the Outer Ring Road and Whitefield with access to key areas such as

Sarjapur Road and NH 207. The upcoming PRR will cut straight through Varthur, enabling access to South

Bengaluru.

Kengeri: Improved connectivity by rail and proximity to NICE, ORR and the Mysore-Bengaluru Highway, along with

a likely extension of Namma Metro from Mysore Road Terminal.

Begur: Excellent connectivity through NICE corridor, Hosur Road, Bannerghatta and Jigani Road.


Figure 12: % share of a�ordable launches and absorption in Bengaluru in total Bengaluru

Figure 13: Weighted average price index of a�ordable units for key localities in Bengaluru

Varthur

Begur

Kengeri



SuburbLocality

Kengeri Mysore Road 3,100 - 3,300 7 . 8

Begur

Varthur

Hosur Road 3,500 - 3,700 8 . 0

Bengaluru East 3,200 - 3,700 7 . 5




14


40%

58%

38%

55%50% 49%

44%50% 45%46% 46%

43% 43% 45% 45%40% 40%

43%

0%

10%

20%

30%

40%

50%

60%

70%


Launches Absorption

100

103103

104

105

9596

94 94

94100 97

100102 103

100

99

106

113 114115 116 117 118

90

95

100

105

110

115

120


Bengaluru Begur Kengeri Varthur

April 2017


Chennai, the fourth most populous metropolitan city of India, is also one of the most important economic centres of

India. Chennai's economy has a broad industrial base spanning automobile, computer, technology, hardware

manufacturing, financial services and health care sectors. The city is India's second-largest exporter of software, IT

and ITeS services. The city also accounts for about 60 per cent of the country's automotive exports.

CHENNAI

Urapakkam: One of the fastest-growing residential localities on the GST Road towards South-West of Chennai, the

presence of IT companies and a proposed bus terminal is expected to boost demand for housing.

West Tambaram: Well connected to other major localities via road and rail, the region lies on the industrial

corridor of the city and is in close proximity to IT parks. Housing demand in the locality is likely to boost on

account of a proposed skywalk and multi-level car park to reduce congestion.


Figure 14: % share of a�ordable launches and absorption in Chennai in total Chennai

Figure 15: Weighted average price index of a�ordable units for key localities in Chennai

Urapakkam

WestTambaram



SuburbLocality

Urapakkam GST Road 3,700-3,850 7 . 1

West Tambaram GST Road 3,900-4,100 8 . 0




15


69%

56%

44%

51%

36%

59%56%

52%

69%

60% 60% 58%54%

45%

53%49%

53%53%

0%

10%

20%

30%

40%

50%

60%

70%

80%


Launches Absorption

100100

101102 102 102

102 101 101

99 98

98 99 9899

100

100

101

97 9798

100

90

92

94

96

98

100

102

104


Chennai Urapakkam West Tambaram

April 2017


16

Hyderabad, the joint capital of Telangana and Andhra Pradesh, is also known as the ‘Pearl City’. The growth of the IT

& ITeS industry has resulted in a large migration to the city. The return of the city to normalcy after the formation of

Telangana is expected to improve the residential real estate landscape of Hyderabad.

HYDERABAD

Kompally: Part of the planned Hyderabad-Nagpur Industrial Corridor, Kompally is in close proximity to well-known

manufacturing hubs. The upcoming 23-km Sanathnagar-Moula Ali suburban rail network is likely to improve the

connectivity and boost residential demand in this locality.

Manikonda: Part of Zone 1 of the planned Information Technology Investment Region (ITIR), Manikonda is at the

epicenter of a burgeoning IT hub, with presence of companies such as Amazon and Google. The area is also close

to key IT hubs such as HITEC City and GAME City.


Figure 16: % share of a�ordable launches and absorption in Hyderabad in total Hyderabad

Figure 17: Weighted average price index of a�ordable units for key localities in Hyderabad

Kompally

Manikonda



SuburbLocality

Kompally Hyderabad North 2,300 - 2,600 7 . 8

Manikonda Hyderabad West 2,800 - 3,100 8 . 3





38%44%

51%

58%

32%27%

41%

27%

45%52%

49% 49% 50%

44%

35% 34% 37% 36%

0%

10%

20%

30%

40%

50%

60%

70%


Launches Absorption

101101

102

105106

110

100 101 101 102 102 103

114 114 115

100 100102 102

107

101

106108

90

95

100

105

110

115

120


Hyderabad Kompally Manikonda

April 2017


17

Kolkata, spread over 1,887 sq. km., is one of the important ports in India. It handled 46.3 million tonnes of tra�c in

2014-15 and won the ‘Container Handling Port of the Year’ award for excellence in container handling. Growing

consumerism & high income demographics are expected to drive the growth of residential real estate in the city.

KOLKATA

New Town: Part of the proposed list of smart cities, New Town is an established commercial and residential hub

with growing social infrastructure. The region is well connected to other parts of the city and the upcoming metro

from New Gariya to Airport is likely to improve the region’s attractiveness.

Sonarpur: Proximity to Garia metro line and competitive pricing of residential units along with metropolitan

decentralization which proposed Baruipur as the district headquarters has made the region an attractive location

for a�ordable housing.


Figure 18: % share of a�ordable launches and absorption in Kolkata in total Kolkata

Figure 19: Weighted average price index of a�ordable units for key localities in Kolkata

New Town

Sonarpur



SuburbLocality

New Town Kolkata North 2,700 - 2,850 8 . 1

Sonarpur Kolkata West 2,300 - 2,450 7 . 1





53%

81%

63%

79% 79%

43%

86%82% 76%

61% 65% 65% 67% 69%64% 64% 68%

75%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Launches Absorption

100 100 10099 99

99

105

103 103

105

102100

100

103 104 102102

103

106

94

96

98

100

102

104

106

108


Kolkata New Town Sonarpur

April 2017


18

Mumbai, India’s largest metropolitan city and the world’s fifth-most-populous city, is the commercial and financial

capital of India. It is home to the two stock exchanges that account for most of the securities trading in the country.

With the busiest airport in India and two large seaports, Mumbai accounts for over half of India’s foreign trade and

generates about five per cent of India’s GDP and one-third of the country’s tax revenues.

MUMBAI

Dombivali: In close proximity to industrial areas of Bhiwandi and Ambernath, Dombivali is part of the upcoming

125-Km multimodal corridor between Virar and Alibaug. The proposed Thane-Bhiwandi-Kalyan (Metr-5) will

improve connectivity of the area with central Mumbai.

Karanjade: The locality is likely to witness a spurt in demand on account of improved connectivity due to the

upcoming Navi Mumbai Metro, Navi Mumbai Airport and the Mumbai Trans Harbour Link (MTHL).


Figure 20: % share of a�ordable launches and absorption in Mumbai in total Mumbai

Figure 21: Weighted average price index of a�ordable units for key localities in Mumbai

Dombivali

Karanjade



SuburbLocality

Dombivali Beyond Thane 4,200 - 4,300 7 . 6

Karanjade Navi Mumbai 4,600-4,800 7 . 0





53%57%

47% 46%42% 43%

50%

45% 42%

54% 53%49% 50% 49%

45% 44% 45% 43%

0%

10%

20%

30%

40%

50%

60%


Launches Absorption

100100 100

101 100 101101

100 100

97 97 9697

99 99 100

100 100102 102

102103 103

104 104

92

94

96

98

100

102

104

106


Mumbai Dombivali Karanjade

April 2017


19

Pune, the eighth-largest city of India and the second-largest of Maharashtra, is also known as the ‘Cultural Capital’ of

the state. Being India’s prime educational destination and automotive manufacturing hub, Pune is also known as the

‘Oxford of The East’ & ‘Detroit of India’. The residential market of the city is spurred by a robust local economy and

high demand from end users.

PUNE

Undri: Residential demand in the region is driven by employees working in IT & ITeS hubs in nearby localities such

as Magarpatta and Phursungi. Proximity to MG Road, Salunke Vihar, Wanowrie and NIBM along with improved

connectivity to traditional business and inter-city transport hubs make Undri one of the promising destinations for

a�ordable housing.

Wagholi: Strategically located on Nagar Road, Wagholi is in close proximity to IT hubs of Kharadi and Hadapsar.

The locality is witnessing infrastructure development, with BRTS and four-lane flyover which will link it to

Shikrapur. These are likely to boost demand for a�ordable housing.


Figure 22: % share of a�ordable launches and absorption in Pune in total Pune

Figure 23: Weighted average price index of a�ordable units for key localities in Pune

Undri

Wagholi

Undri



SuburbLocality

Wagholi Nagar Road 3,800 - 3,900 8 . 0

Undri Pune South 4,000 - 4,200 8 . 3





63%70%

75% 78% 78% 79% 78% 77%77%

63% 64% 64% 66% 69% 68% 66%64%

69%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%


Launches Absorption

100

101 101102

103 103 103

100101

102

103

101

100

99 98

101 101

100

10099

99

94

96

98

100

102

104


Pune Undri Wagholi

April 2017


20

POLICY BOOST & INCENTIVES: CENTRAL GOVERNMENT

100 per cent deduction for profits in a housing project for flats of sizes up to

• 30 sq.m. (carpet area) in municipal limits of Chennai, Delhi, Kolkata and Mumbai

• 60 sq.m. (carpet area) in peripheral areas of metros and other cities

(Period of completion of project for claiming deduction under this section is five years)

Profit exemption to boost supply

Additional interest deduction of Rs. 50,000 per annum for loans up to Rs.35 lacs sanctioned in 2016-17 for first-time

home buyers, where cost of the property does not exceed Rs.50 lacs.

Interest deduction to attract first-time home buyers

• Increase in allocation for PMAY (rural) from Rs.15,000 Cr. to Rs.23,000 Cr

• Target to complete 1 Crore houses by 2019

• Tenure of loans under the Credit Linked Subsidy Scheme of Pradhan Mantri Awas Yojana (PMAY) increased to 20

years from the existing 15 years

Pradhan Mantri Awas Yojana (PMAY)

• Reduction in holding period from 36 months to 24 months to qualify as long term capital asset

• Change in base year for indexation from 1981 to 2001 for all classes of assets including immovable property

Change in Base Year And Holding Period

Easier lending norms, opening of the ECB route, taxation benefits and greater corporate governance in a�ordable

housing segment.

Infrastructure Status to A�ordable Housing

Excise duty exemption, currently available to concrete mix manufactured at site for use in construction work, will be

extended to ready-mix concrete as well.

Excise duty exemption for developer

• Exemption from service tax on construction of a�ordable houses of sizes up to 60 sq.m. under any scheme of the

Centre or State Governments, including PPP schemes

• Constructed buildings which are stock-in-trade, tax on notional rental income will apply after 1 year of the end of

the year in which completion certificate is received

Tax Incentives

April 2017

21

POLICY BOOST & INCENTIVES: CENTRAL GOVERNMENT

The Smart Cities Mission to develop 100 cities

by the Union government to provide a platform

for increased investment opportunities in

a�ordable housing segment

To build 30 million houses by 2022 for the

economically weaker sections and low-income

groups through public-private-partnership

model with interest subsidy and increased flow

of resources towards the housing sector

AMRUT (Atal Mission for Rejuvenation and Urban Transformation)

Pradhan Mantri Awas Yojana (PMAY) orThe Sardar Patel Urban Housing Mission

• Increased focus on road infrastructure, upgrade of highways, action plan for revival of unserved and underserved

airports with an aim to improve the connectivity and basic quality of life in various key localities that are

pertinent for a�ordable housing projects

• Government focus on digitization of land records in rural areas is another initiative to simplify the land acquisition

April 2017


22

POLICY MEASURES: STATE GOVERNMENTS

HARYANA MAHARASHTRA

• Booking amount: Five per cent of the cost of house

• Twenty per cent payment on allotment, balance 75 per cent in six interest-free EMIs spread over three years, provided the realization is before due date

• Interest rate: 10 per cent per annum

• License fees and IDC waived o�

• Last instalment of EDC waived o� for the developer if project completed within 3.5 years

• Builder of an a�ordable housing project allowed to receive up to 25% of the price of the apartment without getting environment clearance for the project

KARNATAKA

• Waiver of conversion charges, external development charges, building plan approval fee, plan sanction fee by ULBs/UDAs etc

• Buyback guarantee for EWS/LIG dwelling units

• Reduced timelines for obtaining approvals, conversions, NOCs, sanctions, licenses etc.

• Increased land supply exclusively for a�ordable housing projects

• Additional FAR which, if not utilized, can be converted into TDRs

• Reduction of stamp duty for registration

GUJARAT

• Permissible Floor Space Index (FSI) of up to three

• Exemption from municipal charges only for sub-plots used for construction of EWS/LIG category houses

UTTAR PRADESH -Samajwadi Awas Yojna

• Fixed ceiling rates for apartments

• Discounts in the development charges, land use conversion charges and stamp duty charges

• Single window clearances

• Stamp duty and registration charges: One per cent of the market rate for EWS; two per cent for LIG; three per cent for MIG

• Five per cent of construction cost of all MHADA projects, collected by the State government on input material cost will be reimbursed to the developer

ANDHRA PRADESH RAJASTHAN ODISHA

• Single state-level nodal agency to integrate all a�ordable housing projects

• 100 per cent exemption of stamp duty, land-use conversion charges, building plan approval fee and all other municipal charges

• Application filing through e-seva centres

• 100 per cent waiver of land conversion charges and building plan approval charges

• FAR increased by 0.50 without betterment levy

• Maximum FAR for private devel-opers: Up to 2.25

• Additional 50 per cent of normal FAR as incentive

• 50 per cent exemption on land conversion charges

April 2017


23

PRIVATE PARTICIPATION IN AFFORDABLE HOUSING

A�ordable housing is still in its nascent stage in India. Many reputed private players are entering this segment to

diversify their portfolios and to cover the risk, as sales of high-end residential/luxury segment are slowing. The

economics of scale, first-mover advantages, existence of a huge buyer base and also lucrative incentives announced

by the Union government are encouraging private participation, including the entry of reputed developers.

The opportunity is not without its own set of challenges. Lack of availability of urban land, rising construction cost and

regulatory issues are supply-side constraints that a�ect the ability of low-income groups to buy housing at prevailing

prices in the organized sector. Despite these challenges, there are many developers which have recognized the

opportunity and are active in this segment. These include TATA Housing, Godrej Properties, Mahindra Lifespaces,

Shapoorji Pallonji, VBHC and HDIL.

The sector is receiving funding from prominent lending houses, including HDFC, IFC, Standard Chartered, Motilal

Oswal etc. As a result, many end-users in the low-income bracket have realized their dream of owning a home. The

announcement of a�ordable housing segment being given infrastructure status is likely to provide the necessary

impetus to the developer community and a�ordable housing focused private equity and real estate funds.

TATA Housing | Godrej Properties | Shapoorji Pallonji | Puravankara Group | HDIL | Vastushodh | Maple Group

Xrbia | VBHC | Mahindra Lifespace | Foliage | Playtor | Sheltrex

Prominent Developers

HDFC-Abu Dhabi Investment Authority | Essel Group | Motilal Oswal | Standard Chartered | International Finance

Corporation (IFC) | Westbridge Capital, Sequoia Capital and Nexus Venture | GIC | ICICI Prudential AMC |

Brick Eagle | Square Four Group

Private Participation

April 2017


24

AFFORDABLE HOUSING: OPPORTUNITY

Notes:

* PropTiger estimate of requirement by income group EWS (56%), LIG (39%) and MIG (5%)

** Unit price of the house - EWS - Rs. 500,000 (MHUPA defined), LIG - Rs. 1,200,000 (MHUPA defined) and MIG - Rs. 5,000,000 (PropTiger estimate)

*** EWS - Rs.2.1 trillion, LIG - Rs.3.6 trillion and MIG - Rs.2.9 trillion

Source: PropTiger DataLabs & MHUPA

~18.5 mn

Current shortfall in

housing units; 96 per

cent in EWS & LIG

category

47 mn

Estimated urban

a�ordable homes to

be built by 2022

(Estimate by PropTiger

DataLabs)

7.5-8 mn*

Annual

requirement

Rs. 20 lacs**

Average

unit price

~Rs. 8.6 trillion***

Annual opportunity till

2022 (Total of Rs. 52

trillion between

2017 and 2022)

AFFORDABLE HOUSING: DRIVERS AND RESTRAINTS

Increasing

Demand

for A�ordable

Housing

Improvement inTransport & Connectivity

State & CentralIncentives

Improvement inBusiness

Environment

Urbanization

Constrained

Supply

Non-availabilityof Finance

Regulatory Constraints

Scarcityof Land

Lack of MarketableLand Parcels

Lack of SocialInfrastrcture

RESTRAINTS DRIVERS

April 2017


25

AFFORDABLE HOUSING: WAY FORWARD AND WHAT NEEDS TO BE DONE

Economic growth, which usually leads to a rise in incomes, has resulted in an unusual situation in India. While we

have progressed to make commodities such as televisions, refrigerators, mobile phones, etc. more a�ordable, large

sections of the society in India still find it extremely di�cult to buy a house. Though “a�ordable housing” as a concept

is a solution to these current housing issues, converting it into a reality requires unwavering commitment from all

stakeholders. With clear evidence that buyers, suppliers, financial institutions and policymakers are interested in this

space, we believe the time is appropriate for players to grab this opportunity and solve India’s housing woes.

The government is playing an active role in facilitating investments into this segment by granting infrastructure status

to the segment and launching schemes such as Pradhan Mantri Awas Yojana, which will ensure 30 million houses by

2022, mostly for the economically weaker sections and low-income groups. Private players, meanwhile, need to step

up to this enormous opportunity to ensure the country achieves its objectives of housing for all by 2022. A�ordable

housing also promises a solution to the proliferation of slums, unorganized real estate development, unplanned

growth and tra�c congestion. The critical issues that need to be addressed include increasing the reach among the

right segment through micro-mortgage financing mechanisms and self-help groups. Flexible paying mechanisms

based on variable income flows is also a measure through which demand can be increased. On the supply side,

attractive schemes for slum redevelopment and rehabilitation, ensuring adequate availability of land, streamlining of

land records, inclusion of mass housing zones in City Development Plans (CDPs) and single-window clearance for

smaller projects are necessary. Developers also need to focus on marketability of small units and management of

project cost and timelines, to prevent cost-time overruns. With the Real Estate (Regulation and Development) Act

coming into full force and an intent to address the issues pertaining to this segment, we believe a�ordable housing

will pave the way for the revival of real estate in India.

April 2017


26

About PropTiger

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properties worth over US$1.5 billion.

Head – Consulting and Data Insights

[email protected]

+91-9967849666

Anurag Jhanwar, MRICS

Contact PropTiger for Real Estate Insights:

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April 2017


27

PROPTIGER OFFICES

GURGAON

NOIDA

GURGAON

North Zone

D-12, Ist Floor, Sector 3, Noida 201301(U.P.)Helpdesk: 0120-4802300

Plot No.25, Echelon SquareSector-32, Gurgaon - 122001.Helpdesk: 0124-4866700/ 4866600

SCO 11-12, 2nd Floor,Near OM Sweets, Sector-31,Gurgaon - 122001.Helpdesk: 0124-6655900

MUMBAI

MUMBAI

MUMBAI

West Zone

Unit A, 11th Floor, MBC Park, Kasarwadavli,Thane - West - 400601Helpdesk: 022-41536500

1st Floor, Runwal Chambers, Opp. BMC O�ce,Chembur - East, Mumbai - 400071.Helpdesk: 022-61697300

Unit no-904, 9th Floor,B-Wing, Times Square, Andheri - Kurla Road Andheri - East, Mumbai - 400059 Helpdesk: 022-61358100

MUMBAI

AHMEDABAD

PUNE

510 - 511, Parshwanath Business Park,Prahlad Nagar, Ahmedabad Helpdesk: 1800-103-104-1

Unit No. 401, 402 & 403, Plot No. 3, V Times Square, Sector-15, CBD Belapur, Navi Mumbai - 400614 Helpdesk: 022-39671500Helpdesk: 022-61697300

1B/2, B3, Cerebrum IT Park,Kalyani Nagar, Pune - 411014.Helpdesk: 020-41483543

PUNE

PUNE

403, Stellar Enclave,Aundh (Above McDonald), Pune - 411007.Helpdesk: 020-49105555

3rd Floor, Kapila Matrix, 40-E,Ghorpadi, Mundhwa Road, Pune - 411036.Helpdesk: 020-66447000

BENGALURU

South and East Zone

8,8A, 2nd Floor,Venkatadri, Hosur main road, GarvebhaviPalya,Bengaluru - 560008Helpdesk: 080-67458200

CHENNAI

HYDERABAD

304, Plot No. 8,9,10,11 Fortune Chambers,Image Garder Road, Opp. HDFC Bank, Madhapur - 500081, HyderabadHelpdesk: 040-43299900

C-53, 1st floor,Guindy Industrial Estate, Chennai- 600032Helpdesk: 044-42902800

KOLKATA

DGK 509, DLF Galleria,New Town,Rajarhaat, Kolkata - 700516 Helpdesk: 1800-103-104-1

April 2017

BENGALURU

SR complex #2, Ground Floor,Thavarekere Main Road,S.G Palya, DRC Post, Kormangala, Bengaluru-29Karnataka - 560047Helpdesk: 080-67076700


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AHMEDABAD • BENGALURU • CHENNAI • GURGAON • HYDERABAD • KOLKATA • MUMBAI • NOIDA • PUNE

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