India is presently in the midst of a burgeoning housing crisis. Reduced opportunities in the rural economy have led to massive inward migration towards urban centres. The continuing agrarian crisis has complicated the situation. A wide gap has emerged between the demand and supply of housing space in urban India. As the pace of urbanisation is continuously increasing, the gap between the demand and supply of housing spaces is getting wider. A concentrated focus on mass housing projects is needed.
According to reports, an estimated urban housing shortage of around 18.78 million houses is challenging India’s urbanisation. The shortage is more prominent in the Economically Weaker Section (EWS) / Lower Income Group (LIG) / Middle Income Group (MIG), which comprises of 95.62% of this shortage. The government has rightly recognised the threat and launched the Pradhan Mantri Awas Yojana – Housing for All Scheme- to promote the mass housing and affordable housing concept in India. An active participation of the private sector can enhance the situation.
Participation of private players in mass housing
The participation of private players remains low in mass housing projects. The profit margin here as compared to luxury or upscale projects remains very low. The prices of EWS, LIG, and MIG units are often guided by government guidelines where the margin is relatively less. Additionally, a mass housing project requires a much larger parcel of land for development, which is difficult to obtain for private players. According to a well-placed industry source, “There will be more private participation in the mass housing sector if the government is seen to actively facilitate the entry of private players. With profit margins low, a certain handholding is required for the private sector along with scaled incentives from the government for players vying for entry in the segment.”
Land has been a perpetual source of crisis in the Indian real estate sector. According to a large number of leading private players from the sector with whom BE interacted, it is impossible for any private party to initiate a mass housing project without the government acquiring or facilitating the land needed for mass housing projects.
Shukhobrishti – A notable exception
Mass housing in India is a concept of housing development that is publicly funded and administered predominantly for low-income families. However, a successful Public Private Partnership model was developed by Shapoorji Pallonji and West Bengal Housing Infrastructure Development Corporation Ltd (WBHIDCO), which is the nodal agency responsible for the development of New Town, Rajarhat – a planned township on the eastern fringes of Kolkata.
The Shukhobrishti project is the largest mass housing project in India, which would provide home to around 20,000 families. According to Rana Gupta, Senior Vice President, Shapoorji Pallonji & Co. Ltd, “We were interested and took up this project because on completion it would be a landmark project in the company’s portfolio and at the same time, have a great social impact.”
According to Gautam Deb, former Housing Minister of West Bengal and former Chairman of WBHIDCO, who was in charge when the project was conceived, “When we planned on building this township, providing affordable housing was one of our topmost priorities, apart from finding an answer to the state’s housing crisis in general. We had initiated this project to bridge the gap between demand and supply of housing space. EOI for the project was issued by WBHIDCO in 2006 and the project was awarded to SPCPL through a bidding process.”
The project is being constructed over nearly 150 acres of land. It is to have 20,000 apartments which will include 10,444 LIG, 3840 MIG and 5716 Upper MIG apartments. The total Build Up Area (BUA) of the project is approximately 15.00 million square feet. The project is presently buzzing with activity. It is already a home to approximately 6500 families and is well connected by regular bus services. It is located in southern part of the new township and has notably helped the local economy, with shops and trading centres coming up to facilitate the residents.
The developers have been approaching the project on a cost optimisation mode. Since the volume of the project is huge, the rates in terms of procurement of material and rendering of service are quite competitive. Gupta said, “In the project, since there are in total three types of units and all other units are typical in nature, minor cost optimization in design results in huge cost savings.”
The project has been in high demand since its inception. Gupta told BE, “Going by the price of the units, the MIG units had always been the most over-subscribed product with demand going up to 55 applications per unit in Phase 3.” The demand for the LIG units is also very high. The project will also have a school, a community centre, a club, a health centre and a commercial complex.
The success of this project can be attributed to a proactive governmental participation in this project which has aided the private developer. In accordance with the agreement between WBHIDCO and Bengal Shapoorji Pallonji Pvt. Ltd, the peripheral infrastructure for the project that includes roads, drainage, sewerage, water supply among others were provided by WBHIDCO. Gupta informed, “WBHIDCO has always extended complete support for the project. The 48 metre major arterial road has been extended upto our project and the municipal drainage and sewerage lines have been completed. To enhance connectivity, 10 new bus services have also been started.”
Drawing inspiration from their successful participation in this massive mass housing project, SPCPL has initiated Joyville Shapoorji Housing Pvt. Ltd., which is working in collaboration with the World Bank, the Asian Development Bank, and Standard Chartered Bank to promote affordable housing in India. It has initiated its maiden projects in West Bengal and Maharashtra.