September 2014 \ Business & Investment \ REAL ESTATE
NAREDCO Convention Focus on Housing for All

The important outcomes of Convention which came out from study conducted by KPMG and deliberations were–

• India’s urban population is expected to grow at a rate of 1 crore per annum, which will continue till 2050.

• India will need to construct 11 crore housing units (6 crore rural and 5 crore urban) by 2022 to meet the requirement of housing for all and 70 per cent of this will be for EWS and LIG. This includes existing shortage of 6 crore housing units.

• 70 percent of total housing requirement will be in 9 States – Uttar Pradesh, Bihar, Maharashtra, West Bengal, Madhya Pradesh, Andhra Pradesh (including Telangana), Rajasthan, Tamil Nadu and Karnataka.

• 1.7 to 2 lakh hectare of land will be required to meet the urban housing need of 5 crore.

• A total investment of USD 2 trillion till 2022, or USD 250-260 billion per annum, will be required to achieve the target of Housing for All by 2022 and 85 to 90 percent of this will be for urban housing. This would necessitate doubling the present investment of USD 110-120 billion per annum.

• In addition to USD 2 trillion for housing, USD 1.5 trillion will be required to build urban infrastructure and commercial real estate, hiking total investment needed to USD 3.5 trillion.

Strengthening private sector participation in affordable housing construction, which has been confined to high and middle income segment due to many structural issues, has been the unanimous recommendation of the Convention. It was felt that the short fall of USD 500 – 600 billion in USD 2 trillion required, taking into consideration the current rate of investment and 5-6 percent annum growth, will be difficult to bridge because of structural issues such as high gestation period of housing projects, limited and expensive liquidity, spiraling land and construction cost, high fees, duties and taxes, unfavourable and archaic development norms, delay in project approval and unaffordability of EWS / LIG households because of high unit cost. It was also felt that Government should address structural issues on priority and encourage private sector participation, as they are better placed in managing financial and construction risk in comparison to Government.

Tags: Real Estate