Affordable Housing In India – Where Is The Supply?

Affordable housing is a term we use for residential units in India’s urban areas which are affordably priced with respect to households that fall within a specific limited income range. There is no single set of parameters to define what an affordable housing unit should cost in India. This is because the pricing and feasibility to developers of affordable housing is a function of the city, location within the city, type of project being built and also the construction technology employed.

aff

In India, it is appropriate to judge the affordability of a home on three broad parameters – the monthly income of prospective buyers from the target segment, the size of the home and, of course, its price. There is another element that should be mentioned, namely the target clientele itself. We tend to look at the word ‘affordable’ solely in terms of the LIG (lower income group) segment. For this segment, affordable housing would mean 200-300 square foot dwellings priced at between 7-12 lakh.

But what about people who earn more than the average factory labourer but still cannot afford to buy a decent 1 BHK flat of 300-450 square feet within ten to fifteen kilometers of their workplaces? They too need affordable housing – housing appropriately priced for the middle class. The home buyers in this segment can afford to buy flats in the price range of Rs. 30-35 lakh via home loans.

Obviously, they expect a certain standard of living, comforts and facilities for this expense. However, but even such flats are hard to come by in our larger cities. This is the case even in Pune.

Today, around 30% of India’s population lives and works in urban areas. This means that they occupy less than 2% of the land available in the country. If we zoom in on Maharashtra, it emerges that close to 60% of the overall population lives in urban locations. Distressingly, a closer look at a city like Mumbai reveals that over 50% of its citizens live in slums. Mumbai’s slums occupy less than 4% of the land available in the city. Obviously, the affordable housing quotient has gone badly wrong in Pune’s prosperous neighbouring city. However, the problem is larger than just one city, which continues to get negative press only because of its exorbitantly high property rates and enormous annual inward migration.

Despite everything being said on the matter, the shortage of affordable housing in India is getting worse instead of better. The country’s urban population of 285 million has multiplied itself by five over the last half century. It is projected that it will continue to increase at this fast pace, and that 50% of all Indians will be living in urban areas by the end of the next three decades. So, if the shortage for housing for the lower income segment stands at 25 million today and there is no increase in the pace of supply of affordable housing launches, what will this figure look like in 30 years?

Let us look at the situation from a real estate market point of view. There is, in fact, a gigantic market for affordable housing in India. Currently, it is valued at anything between Rs. 5-10 trillion. What is really being done to address this huge market – especially the one constituted by the ever-growing middle class? There are next to no Government incentives for projects with flats in the Rs. 30-35 lakh bracket.

While the only answers to this question in Mumbai seem to lie in small projects on the far outskirts of the city, Pune presents a far more encouraging picture. Developers of township properties in Pune have now begun addressing this market with an internationally inspired property development model called integrated townships. This model is based on maximum value for money to buyers, based on high-grade common infrastructure and shared facilities in more cost-effective, yet progressive areas like the Pimpri Chinchwad Municipal Corporation.

With fully integrated township projects like Woodsville and Celestial City, we at Pharande Spaces have been successful in delivering affordable housing for the mid-income segment of home buyers in Pune and the PCMC area.  There are various reasons for this success.

For one, land for these integrated townships was acquired early on in upcoming locations such as Ravet and Moshi. This meant that the price of the finished products could be kept within the means of Pune property buyers. Secondly, townships like Woodsville and Celestial City are conceived and constructed on a model that allows luxurious facilities and amenities on an economy of scale. In other words, it is possible to provide luxurious features for all units in these projects on the basis of a large-scale master plan.

Anil-Pharande

 

 

Anil Pharande is Vice President – CREDAI (Pune Metro) and Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in the PCMC area of Pune, India.

A Call For Action For The Pimpri Chinchwad Municipal Corporation

Anil-Pharande

 

 

Anil Pharande is Vice President of CREDAI Pune Metro and Chairman of Pharande  Spaces, a leading construction and development firm that develops township properties in the PCMC area of Pune, India.

The Pimpri Chinchwad Municipal Corporation was honoured by by presence of Maharashtra Chief Minister Shri Prithviraj Chavan, Deputy Chief Minister Shri Ajit Pawar and NCP President Shri Sharad Pawar. These distinguished dignitaries had very generously agreed to inaugurate several key infrastructure projects at PCMC:

  • The new PCNTDA building near Akurdi Railway station
  • The Traffic Park at Bhosari
  • The flyover near Spine Road
  • PCMC’s very own Nala Park
  • The Science Park at Auto Cluster

We, the architects of India’s most progressive planned city, were truly inspired by the kind words of praise, encouragement and hope that these honoured guests offered at the inauguration ceremonies. It is clear that the Government has recognized Pimpri-Chinchwad as the City of the Future, and that the city can depend on the fullest support as it continues to progress.

Nevertheless, there are reasons to be cautious in all this optimism. It is true that the careful and futuristic engineering of development at PCMC by the PCNTDA has become a national and even international benchmark for town planning. However, there have been various challenges along this road to progress. We need to take these hurdles into consideration if the Pimpri Chinchwad Municipal Corporation is to fulfill its maximum potential as the City of the future.

Considering the pace at which real estate development has been taking place, certain lacunae in adhering to the PCNTDA’s master plan were unavoidable. One of the most glaring examples of this was the emergence of unauthorized structures in various pockets of the PCMC.

Thankfully, this issue is being dealt with firmly. The authorities have embarked on a massive drive to deal with such structures, and we are confident that all illegal constructions will be erased from the landscape by the end of 2013. However, we cannot deny that these are damage control measures which would not have been necessary if the damage had never been allowed to occur in the first place.

More Road Connectivity

Another area of concern is lack of adequate road connectivity between certain key areas of the PCMC and areas such as Talegaon. Because of the massive potential for industrial and residential development in and around these areas, they have seen most of the road construction initiatives. In the process, road connectivity from these locations to some of the most important growth areas of PCMC has been largely ignored.

Paradoxically, the areas referred to as Phase 2 in the PCMC development plan hold the highest potential for real estate growth. Thanks to the availability of large land parcels at relatively lower prices, residential and commercial realty development has picking up rapidly in areas such as Moshi. In the meantime, Moshi has become a hotbed for property investments because of the International Convention Centre being jointly developed by the Maratha Chamber of Commerce and the PCMC.

Despite this, there is still no sufficient road connectivity between Phase 2 and the larger industrial hubs. This is going to prove to be a huge stumbling-block for the overall growth of the region. The lack of a suitable road network means that people living in areas like Moshi face difficulties in reaching their workplaces in these employment clusters. This issue must be addressed on a priority basis. A city like PCMC must do everything in its power to ensure that its growth pockets are not isolated from each other.

PCMC Needs To Expand

Yet another issue is that the population within the Pimpri Chinchwad Municipal Corporation is growing at an annual rate of 73%. Such a rate of growth makes it necessary to provide more spaces for development. Unfortunately, there have been limitations put on the city’s potential for geographic expansion by Red Zones (non-development areas).

It is imperative that more of the region’s outlying villages be included in the urbanization plan. There are enough examples in India of what happens when a city does not expand geographically in tandem with its population growth. Such a situation must not be allowed to develop in the PCMC. Also, PCMC needs to be able to accommodate the rapid growth in population in terms of providing more educational institutions, shopping complexes, healthcare establishments and entertainment zones.

Encourage Green Development

Finally, I would like to touch on PCMC’s major thrust towards sustainable real estate development. It is no secret that green development is the future of real estate all over the world. In fact, many of the bigger residential townships and commercial complexes in the PCMC have already adopted the ‘green development’ mantra. The new PCNTDA building itself is a resounding statement to how important sustainable development has become to the city.

Nevertheless, there is still a noticeable lack of enthusiasm within the region about the benefits of green homes and workplaces. One of the reasons for this is lack of awareness. Many of the region’s residential property developers and buyers have not been attuned to the advantages of environmentally sustainable properties. I urge the State Government to join hands with the PCMC to bring about greater awareness and eventual adoption of this vitally important principle.

I also strongly advocate better incentives for developers and buyers of green homes in the PCMC. The use of non-conventional energy sources and sustainable waste water management does not only have a positive impact on the environment and on the overall quality of life. Such measures reduce the strain on municipal resources, resulting in significant revenue savings. Unless the benefits of these savings are passed back on to the developers and buyers of sustainable properties, we cannot expect a more wide-spread adoption of the ‘green’ mantra in PCMC.

We gratefully acknowledge the importance that the visiting dignitaries have given to the City of the Future by gracing it with their presence. At the same time, we sincerely request them to take heed of PCMC’s most urgent requirements.

PCMC gets defence land for widening Aundh Road

(Times of India, Sept. 10, 2011)

pune PropertyPUNE: The work of widening the Aundh-Ravet Road near Aundh commenced on Friday after a gap of nearly a year. The Pimpri Chinchwad Municipal Corporation has begun the work as it has received written permission from the defence authorities. The road-widening work had been stalled as the defence authorities had earlier objected to the work.

Municipal commissioner Ashish Sharma said the defence authorities on Thursday granted the permission to the PCMC. He said the PCMC had earlier paid Rs 18 crore to the defence authorities for the land.

The widening work will be from the Aundh Chest Hospital up to Y junction. The work will reduce traffic congestion on the narrow road near the hospital, he added. The widening work on the 14.4-km Aundh-Ravet Road is being done for developing a BRT corridor. For early completion of the work, the road has been divided into seven sections for which contracts have been given. The work on widening the four-km stretch from Rajiv Gandhi bridge in Aundh to Sai chowk in New Sangvi could not be completed due to the delay in getting the defence land.

The narrow stretch of the road is a bottleneck and witnesses daily traffic snarls during the peak morning and evening hours and causes inconvenience to hundreds of motorists.

Dilip Kudale, coordinator, engineering department, PCMC, said, the road is being widened from 15 to 45 metres. The PCMC will complete the work in the next six months.

http://timesofindia.indiatimes.com/city/pune/PCMC-gets-defence-land-for-widening-Aundh-Road/articleshow/9930496.cms

Impressed, CM may follow PCNTDA way to plug land scams

Anil-Pharande

 

 

Anil Pharande, CMD – Pharande Spaces

(DNA, July 6, 2011)

Pune: The Maharashtra government has decided to use the Pimpri-Chinchwad New Township Development Authority’s (PCNTDA) ‘Shashwat’ programme to digitise all land records in government offices across the state. This will automatically help put an end to land scams and ensure transparency in government records.

The PCNTDA recently launched its touch screen facility to give information about lease deeds, allotment letters and other land records. The authority started the facility under its ‘Shashwat’ programme to digitise all records since its formation in 1972.

PCNTDA chief executive officer Suhas Diwase made a presentation of the ‘Shashwat’ project during his meeting in Pune last week with chief minister (CM) Prithviraj Chavan. The CM was impressed by the system and expressed his desire to start the project at the state level in all municipal corporations as well as government offices to stop corruption and give easy access to general public.

The CM also asked the authority to submit the detailed procedure manual of the project. Speaking to DNA, Diwase said, “As per the CM’s guideline, we are preparing the procedure manual and will submit it to the government soon.”

Diwase added that Pune and Pimpri-Chinchwad municipal corporations, district courts, Pune commissioner’s office and district collector have also approached the authority to provide guidance on introducing the project to digitise land records.

Elaborating on the project, he said, “The touch screen facility has been receiving good public response since it started in May. It has also reduced the number of applications under the Right to Information Act, 2005 (RTI).”

Under the project, 50 lakh documents — mainly land records — have been scanned. To check land records, the citizens have to meet various officials and employees, which is not only time consuming but also affects work at the office. All land records and official information are now made available through touch screen facility at the office.

The user-friendly facility does not require the assistance of any PCNTDA employee. Diwase said he joined the authority in 2008 and, after barely a month, undertook the project. “Very soon, citizens will get prints of any land record in the office itself,” he said.

The project has helped usher transparency in the PCNTDA office in Nigdi. Gone are the heaps of files in a shabby state and in their place is a pleasant office with a corporate touch.

http://daily.bhaskar.com/article/MAH-PUN-impressed-cm-may-follow-pcntda-way-to-plug-land-scams-2238881.html

PCMC Will Decide On 234 Acres On Saturday

(TOI, Dec 16, 2010)

land

PUNE: Over 234 acres of land in the green zone, meant for agriculture, in the fringe areas of Pimpri-Chinchwad near Moshi is all set to become residential, if the general body and the state government approve a proposal mooted by the Pimpri-Chinchwad Municipal Corporation.

The proposal was recently approved by the PCMC’s law committee. It says that the use of 95 hectares of land at Chikhli Borhadewadi in Moshi should be modified from green zone to residential zone. It will be discussed at the general body meeting on Saturday.

The land was earlier in the 1995 development plan of the Pimpri-Chinchwad New Township Development Authority (PCNTDA). Some areas of the development plan were later brought under the development control regulations of the municipal corporation. The 234 acres of land is also under the development control regulations.

Avinash Patil, deputy director of town planning, PCMC said that the land use was being changed to prevent encroachments on it. “The change in zoning will happen only after the general body approves the proposal. The state government’s approval will also be needed,” he said.

The civic body will first undertake a land-use survey, and prepare a map considering the reservations. It will then plan new roads in the area.

Suggestions and objections from citizens as per the Maharashtra Regional Town Planning Act for changing the zone of the land will be invited.

Pune Property News: HAL Factory In PCMC To Sell 20 Acres

(TNN, Nov 2, 2010)

PUNE: Pimpri-based Hindustan Antibiotics Limited (HAL) — the country’s first public sector drug manufacturing company which has been in financial doldrums for some years now — plans to sell a prime 20-acre land on its premises to shore up its reserves.

With land getting scarce in the Pimpri-Chinchwad township, the sale offer is expected to generate much interest among developers. A major chunk of the land — 16.3 acres — has been set aside for residential purposes, while the remaining 3.7 acres has been reserved for a school. Property prices in housing societies around the company hover in the range of Rs 3,500-Rs 4,000 per sq.ft.

HAL is seeking a minimum reserve price of Rs 137 crore for the plot. In its bid document, it has mentioned the importance of the land because of its prime location. The company is just 12 km from the IT Park at Hinjewadi and 15 km from the proposed airport at Chakan and the existing airport at Lohegaon. The railway station, the Pune-Mumbai national highway and expressway are located close to the company.

The plot, which is part of the company’s surplus assets, was acquired under the land acquisition Act. According to the company, the sale has been approved by the central as well as state government.

The setting up of HAL in March 1954 marked the beginning of the massive industrialization in Pimpri-Chinchwad, which once was the richest municipal council in the country. However, the company has been incurring losses since 1993-94 and was referred to the Board for Industrial and Financial Reconstruction (BIFR) in January 1997.

Why Integrated Residential Projects Have Higher Investment Value

celestial-city-ravet-roads
Planned integrated projects have better property investment value

The concept of living in an integrated residential community is far from new in India. From villages in the rural areas to chawls in the urban areas, we have been doing it for centuries. However, with the rapid urbanization of our cities over the past few decades, the integrated residential project has become a more specialized real estate model.

We all know how disconnected we tend to become from each other while living in cities like Pune and Mumbai. Most developers tend to build their residential projects in such cities wherever small parcels of land are available.

As a result, people tend to live in smaller, isolated pockets. Coupled with the stresses of modern work life, this makes developing a sense of neighbourhood impossible. Homeowners buy units, but they cannot buy a sense of community.

The problems don’t end there. Residential properties in smaller, stand-alone projects do not have the same capacity for maintaining and increasing property investment value as integrated residential projects.

There are various reasons for the higher appreciation prospects of such planned residential projects:

Integrated residential projects adhere to a pre-set development plan with regards to open spaces, communal amenities and common areas. This means that the overall value of the location does not decrease because of unrestricted developments that may crop up later on.

Since such projects have their own infrastructure, they do not depend heavily on what the local municipal corporation delivers (or doesn’t deliver) in terms of sewage management, water supply and overall maintenance of the immediate surroundings.

Both these factors add a lot to the demand for homes in integrated residential developments, because they are directly related to better comfort and quality of life.

Planned integrated projects have better property investment value because there is uniformity of the home designs. Living in such a project assures residents that nobody will build either more luxurious or inferior homes in their neighbourhood.

Moreover, the maintenance of an integrated residential project is centralized. All this means that the overall social profile of the residential community is maintained at all times. Demand for homes in such projects is very high on the property market.

Considering the escalating crime rate in cities like Pune, security has become a big issue for Pune property owners. Burglaries apart, it becomes next to impossible to ensure sufficient security in smaller residential projects in the event of communal riots or other large-scale disruptions.

Since integrated residential projects have various levels of security that protect the entire project, homeowners are assured of much higher levels of safety for themselves, their families and their possessions. Such security commands a higher premium on the Pune property market.

It’s no secret that home buyers look for convenience in shopping and entertainment. The fact that integrated residential projects have these within walking distance adds tremendously to the property investment value of its units.

Because integrated residential projects are conceived and executed by a single developer, there are no variations in construction standards. In the unplanned localities that are so much a part of the Pune property market, many developers with different construction ideologies and standards have projects next to each other.

Substandard construction in one project will not only pull down its own property market value, but also that of those next to it. Two or three inferiorly designed and constructed buildings can cause the entire location’s market profile to collapse.

For all these reasons, the integrated residential projects coming up in Pradhikaran and other areas of the Pimpri Chinchwad Municipal Corporation (PCMC) have boosted this area’s entire property market.

Anil Pharande is President of CREDAI PCMC and Chairman of Pharande Spaces, a leading construction and development firm that develops township properties in the PCMC area of Pune, India.

This article may be reprinted with proper attribution to the author and a link back to PunePropertyBlog.com

PCMC Land Acquisition Notices Sent To 1,800 People

(Times of India, October 6 2010)

PUNE:  The land acquisition office of the Pimpri Chinchwad Municipal Corporation has sent notices to 1,800 people in Kalewadi to acquire land for construction of a road from MM School to the Pavana river. This half-km stretch is part of the Kalewadi phata-Dehu Alandi road bus rapid transit system (BRTS) route.

P G Nale, special land acquisition officer said, “The office started sending notices to the people 10 days ago.

“The notices have been served under the urgency clause of land acquisition as the land is urgently needed to construct the road. The land acquisition department will take possession of the land on October 20. Enquiry about the land owners and the area needed for the road will be conducted after October 27,” Nale said.

Nale said that details of the plot partitions registered in the revenue survey were available with the office but the civic body did not know who the actual owners were. Hence, notices had been sent to all the plot owners according to the survey numbers.

“We need to acquire very little land for the road which has a length of 500 m, he said. The road will be 45 m wide. The land on the right side of this road is within Pimpri-Chinchwad New Township Development Authority (PCNTDA) limits while that on the left side is within PCMC limits,” he said.

“The land within PCNTDA limits had been acquired by the authority many years ago and no compensation needs to be given. The PCNTDA will just transfer the land to the PCMC after the land acquisition drive,” Nale said.

The stretch is part of an 11-km BRTS route being built by the PCMC under the Jawaharlal Nehru National Urban Renewal Mission scheme.

PMPML Plots In PCMC To Open For Commercial Property Use

PUNE: The general body of the Pimpri-Chinchwad Municipal Corporation (PCMC) has cleared the decks for commercial utilisation of land reserved for the Pune Mahanagar Parivahan Mahamandal Limited (PMPML) depots and termini.

The GB has approved a resolution initiating changes in the development control (DC) rules, which is necessary to allow 2.5 floor space index (FSI) on these prime plots.

As per the resolution, only the Pune Mahanagar Parivahan Mahamandal ltd (PMPML) and the PCMC will be able to develop the plots, said Pimpri-Chinchwad mayor Yogesh Behl.

A short-notice proposal was tabled at the general body on Monday following a letter sent by Dilip Band, divisional commissioner and president and managing director of PMPML. Band said in the letter that the transport body was suffering huge losses and there was a need to increase its income from sources other than buses.

The letter further said that the bus depots in Pune and Pimpri Chinchwad are located in prime locations. If 2.5 FSI is granted, depots can be developed on the ground floor while the three to four floors above can be used for parking; the portion above that will be developed on a build operate transfer (BOT) basis for commercial purpose.

“If 2.5 FSI is approved then funds can be generated to help the PMPML cover its losses. It would also mean better public transport in Pune and Pimpri-Chinchwad,” the proposal stated.

To get the FSI approved, changes will have to be made in the DC rules of the PCMC under provisions of section 37 of MRTP Act 1966. In case a site is situated in the bus rapid transit system (BRTS) zone then the premium and other rules which are applicable for the BRTS zone shall not be applicable for the bus stand/terminus/depot.

Satish Kulkarni, joint managing director of the PMPML, confirmed that the transport body has sought permission to commercially exploit all the plots reserved for bus termini/ depots and other purposes for the transport body within the PCMC limits.

A PMPML official said that all the properties and plots that were reserved for the erstwhile Pimpri Chinchwad municipal transport (PCMT) were owned by the PCMC. The PMPML has received possession of only three depots, namely Nigdi, Nehrunagar and Bhosari and one central workshop at Nigdi.

The PMPML had earlier sought possession of six plots in various parts of the municipal limits from the PCMC but the general body has kept the proposal pending.

Pune Builders Want Land Norms On Par With Mumbai

The Confederation of Real Estate Developers’ Associations of India (Credai), Pune has made a representation to the Urban Development Department secretary, TC Benjamin, to make more land available by applying the same parameters of redevelopment for wadas and old city areas as the department has done in Mumbai.

Credai Pune launched a property exhibition at the Le Meridien hotel in he city on Friday. The exhibition will be on till Sunday. The projects offer one BHK to 5 BHK, penthouses, row houses, bunglow plots and offices in PMC, PCMC and surrounding areas.

Shantilal Kataria, vice president Credai, hopes the organisation’s proposal will be approved before Diwali as promised by the Mayor.

“Land prices currently are out of control, and are more than the prices at the peak in 2008. Short supply of land will lead to an upward pressure on prices, and therefore the builders are keen that land is made available soon so that affordability is not affected.” he says.

After having to tackle the lull in the market, it is the shortage of supply in land that developers have to address, highlighting the return of normalcy in the sector . Anuj Bhandari, exhibition committee chairman, Credai, declared that the Pune realty industry has returned to normalcy. “People are now keen on buying homes as the IT and manufacturing industries have started hiring and the economy is looking up with the GDP at a robust eight per cent. But stock of good quality homes is fast depleting,” he said.

The members however do not want to raise prices even as there is shortage.

Satish Magar, president, Credai, Pune, feels that past experience shows sales happening within a certain price band. While demand for ultra luxury homes remains, notwithstanding the general outlook, has people willing to buy in the 2,500/sq.ft- to 4,000/sq.ft price band. “If prices jump too high, demand shrinks significantly. The challenge for us is to maintain quality even as input costs keep rising,” says Magar.

Explaining the issue further, Rohit Gera, vice president, Credai added, “homes are built by established or serious players and also by the fly-by-night operators. A well established builder will ensure that the flats he builds meet all norms, legal, environmental and financial. But on account of very poor land availability, new projects are slow to launch even though demand has returned. So we have projects that are good and safe to buy and also those that are built by those who are in it to make a quick buck. As a result good quality homes are not as easy to find.” The Credai Mega Property exhibition has also banks ICICI and HDFC participating.