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In a move to shower the economically weaker sections of the society with a gamut of economical houses, the Karnataka State Government will give a green signal to the policy of affordable housing. As a support to the move, the state-run Housing and Urban Development Corporation-HUDCO had sought incentive to promote private sectors to play an active role in the scheme for affordable houses for the poor.
In view of credit risk, high capital cost and increasing inventories, the government has ensured to provide the private developers and community borrowers with every financing option to meet with the objective of affordable housing. Furthermore, the private sector will be allowed with the leverage of external commercial borrowings to fulfill the concept of affordable houses, since the stakeholders face a number of financing challenges because of unavailability of long term finance at a cheaper rate.
According to the decision taken by government officials, an affordable house would measure between 600-700 sq ft and fall in the price bracket Rs 6 lakh-Rs 7 lakh. In addition to this, developers in the city are exposed to a number of other challenges such as issues with land acquisition and wide array of clearances from government bodies.
For a housing project to take off, at least 20 clearances are required by a developer from numerous government bodies. This, as a result, plays a pivotal role in delaying the project and mounting the cost significantly. To avoid this, methodologies must be implemented to get clearances and expedite the residential projects to cut down cost and time.
Although, at 41% the urbanization in southern India is ranking high in comparison to other parts of the country, the off-balance growth of real estate is encouraging the demand-supply mismatch. Statistics confirm that there exists 95% shortage for housing units for the low-income and weaker sections of the society. This calls for the need for affordable housing policy in fast-track mode.
According to development authorities, the sluggish pace in the real estate sector was obvious from the fact that apartments, on an average in key Indian cities, remain unsold for nearly 25 months in Bangalore, 48 months in Mumbai and 23 months in New Delhi.
According to property experts, urbanization in South India at 41.2 percent is comparatively much higher than the rest of the country and implies immediate risk on the growing opportunities for the realty sector and its investors. The main issue is delivering affordable houses for the poor section is the end number of roadblocks encountered by developers from permissions to capital investments.
Only a small correction in the process will cut down the construction cost. Urgent steps should be taken to lessen the regulatory and micro-economic risks and give the factor of affordability a new edge.
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After reading inside details, I doubt whether the project is executable or not. Already Karnataka Govt has many challenges to complete many infra projects now affordable home projects too in their pipeline.
When we consider apartments in India, there are number of unsold apartments. An affordable housing scheme need govt support to over come the challenges and hindrance.