Housing Shortage – An opportunity in waiting
Posted by parthajeetsarma in Low Cost Housing on January 16th, 2012
India has made enormous strides at the global platform over the past two decades. Some even say that India is one of the superpowers today. Irrespective of the appropriateness of an adjective to describe India, the fact remains that India today garners more global recognition than it did fifteen or twenty years. Having said that, it appears that governments and the business community in general is focused largely on the global positioning of India and the fruits thereof. At home, the economic opening-up has led to a large population of people whose purchasing power is increasing by the day as consumerism grows by leaps and bounds. At the same time though what is ignored is the fact that a large majority of the population still has no access to clean water, power, housing, education and healthcare. The day to day lives of this majority has not only remained same over the last twenty years, but has deteriorated in many cases.
Whereas about 30% of India’s population today lives in urban centres; it is estimated that nearly half of India’s population will live in urban areas by 2040. What is alarming in that the number of urban centres has practically remained the same over the last seventy years with no sight of this changing. There is thus increasing and unrealistic pressure on the infrastructure of urban centres as migration to these centres continue. As a result, living condition in these urban centres continue to deteriorate. ‘A better quality of life’ has been the incentive for such migration till now; but it seems that it is fast losing the very purpose. It is a paradox to which there seems to have been no answer. Let us try and see what we can do.
MIGRATION – DRIVING FACTORS
- Education
- Healthcare
- Employment
- Housing and associated factors like water and power
Are these not the top factors contributing to the migration from semi urban and rural areas to big urban centres? In urban centres, it has been seen that along with the government, the private sector has a large role to play in fulfilling these basic needs. On the other hand, in the semi urban and rural areas, the private sector has little or no role to play. Why? Because they see no business in ‘doing good’. The numbers do not match up for them….or so they think.
MARKET SIZE – HOUSING
The market size of this is 30 million units. Anyone with a basic knowledge of mathematics can calculate the business potential here. Amongst the four factors, this is the one with the largest “business potential”. It also has the potential for skill development and employment generation. It can easily lead to fulfilling the demand for the other three factors; i.e. education, healthcare and employment.
HOUSING – A DRIVER
In developed countries and in certain states of India like Kerala and Goa, one notices that the urban – rural divide is minimized. Almost everyone has access to the above four factors due to one reason or the other. So instead of a focus on reduction of migration, one needs to shift focus towards bringing in equality as far as access to the four factors go. A socially acceptable and economically viable model has to be set up. It is believed that all the four factors are interlinked and in these, housing can be a driver towards fulfilling the other three.
Every human being deserves to live with dignity in a house which can provide clean water and adequate power. Isn’t this considered basic for anyone who can read this document?
HOUSING >>>CLEAN WATER>>>POWER
How difficult can it be to provide this?
If this seems so simple, then why has no one cracked it? Why has housing not ‘taken off’? Why is the private sector missing in the semi urban and rural areas and not catering to this 30 million units market? A two year long research was conducted by Projectwell to get to the root of this. What came out of the research is this: ‘the style of construction of a house has not changed in India for years’. Despite India’s progress at the global front, one still makes houses the way houses were made fifty years back; brick by brick, layer by layer. This is one industry where virtually nothing has changed, despite the economic prowess that India has garnered. So the question is, is it possible to learn from other ‘industries’, where value reengineering and continuous research and development has led to efficient, safer, better and cheaper products year after year? Why is it that a car becomes affordable for more and more people every year whereas a house becomes less and less affordable for the same group of people?
HOUSE AS A PRODUCT
Can one look at a housing unit as a product? Extensive research and development at Projectwell has shown that tremendous cost and time efficiencies can be built into the erection of a house by engineering the house as a product. Such efficiencies translate to reducing the end user price of owning a housing unit, besides creating employment generation and a general sense of well being by way of living in a ‘good quality’ housing unit with clean water and adequate power.
An analogy may throw some light. A factory produced, mass customizable car is always cheaper than a Dileep Chhabria custom designed car. Similarly if every house needs the services of consultants like an Architect, Structural Engineer, etc, it is but obvious that cost and time efficiencies will be lacking. Can we think of a new role for such consultants?
Projectwell is on a mission to develop certain models of housing units in the ’30 million’ units category. While designing such units, value engineering is being done to reduce the costs drastically, along with the time required for erection. Projectwell is working jointly with global leaders in this mission. Amongst several knowledge partners that Projectwell is working with to develop these models, the prominent ones are KieranTimberlake, Sam Circle Venture, Royal Institute of Chartered Surveyors, Indian Institute of Technology and other regulators.
For the house to be sold as a product, merely looking at the construction practices and design alone will not do. One needs to look at the regulatory framework and other factors like access to credit as well. This is what Projectwell is researching as well, besides partnering with regulators and financial institutions to evolve a feasible model.
FINAL PRODUCT
It is Projectwell’s endeavour to develop a few standard housing models, with the capacity to modify them to individual tastes. Each unit will be sustainable and will have access to clean water and power. They will come packaged with access to credit and ease of paperwork. The package will be such that the units will be affordable to the user group it is meant for. It is believed that this will spur employment generation, setting up of educational institutions and healthcare facilities. The size of the market is such that it may require several others like Projectwell to operate in this space. Projectwell is only starting a mission, which it believes, will pave the way forward for many others to join in.
India Concept House: Solution to Housing Shortage
Posted by Neha Verma in Uncategorized on January 4th, 2012
In December 2011 RICS in partnership with SamCircle ventures, Projectwell and KieranTimberlake launched a concrete panel based prefabricated mass housing concept. A white paper titled ‘India Concept House – manufacturing and assembling of an affordable, quick to build and sustainable mass housing solution for Indian cities’ was released by R.V. Verma, CMD, National Housing Bank. The white paper describes complete off-site housing solution including its supply chain, modularity and expansion, wall and roof components, manufacture process, construction time, and delivery mechanisms.
India is currently falling short of 27 million houses out of which 70% falls under affordable housing group. Therefore, this panel based and quick to build housing solution can reduce the housing supply-demand gap in India. This concept is different from other prefabricated projects already present in market as this will involve a process by which homes are produced through a managed supply chain. India Concept House (ICH) is designed as 23, 46, 70 and 93 sqm increments. Its modular construction system enables a 23 square meter home to be built in four weeks and a 93 square meter house to be built in six weeks.
As compared to the traditional construction, the construction time in ICH can be reduced by 90%. In a current scenario, housing as an industry is still hand crafted and heavily depended on unskilled labor and on site construction. This results in large amount of material wastage and labor in efficiency, leaving aside the quality and thermal comfort level.
The components in ICH are easily transportable, eliminating the need for material handling equipment. The house is designed to reduce energy usage by 50%. It achieves an even temperature throughout the year. There is a provision to capture and recycle water. Housing in Indian scenario is not standardized and the quality differs from region to region. By bringing strong supply chain mechanism and assembly line production ICH will bring standardization in housing construction.
ICH will now be proto typed and to be assessed in the Indian climatic and seismic conditions. This will then be evaluated for manufacturing, delivery mechanisms, thermal comfort, and energy and water consumption. ICH will be promoted as the concept to the housing industry as an example of the kind of prefabricated and offsite mass housing solutions which can revolutionise the market for affordable mass housing solutions in India.
Townships and New Urbanism
Posted by Neha Verma in Uncategorized on January 3rd, 2012
With limited land supply along with huge chasm between demand and supply for individual plots, apartments or sites; developers are now cashing on developing integrated townships in the suburban areas. According to a McKinsey Global Institute report, ‘India’s urban awakening: Building inclusive cities, sustaining economic growth,’ India would need 25 new townships to house about 590 million people by year 2030. This concept has been adopted well and proven a success model in the many developed countries for over 3-4 decades. Since last few years, developers in India are now trying to emulate this success model in Indian cities.
There is a significant segment of consumers living in major urban centres that are becoming interested in the idea of living in one of a number of planned townships that are being built away from major urban hubs and chaos.These townships not only help in meeting the demand for residential and commercial space but also raise the quality of life that is lacking in high density core areas of Indian cities. Along with that, these townships also provide opportunities for urban planners and architects to play with densities and implement ideas of new urbanism that ultimately raises the quality of life of people living in these townships.
Recently, one of my friends shifted from Delhi to Pune city for a job in a company that has an office space in Magarpatta city. In Delhi he used to commute 2 hours daily to work in rush-hour traffic and spent as much time on the journey back home. He loves driving but given the traffic and related problems; he hired a driver. Still, he was frustrated by the amount of time wasted on road and at the end of the day he never used to get time for himself and his family. Then last August, his company rented an office space inside Magarpatta city, which is an integrated township in Pune. This shifting has made his life very easy and comfrtable as he has taken a new apartment inside the township which is hardly 10 minutes walk to his office. This township has a shopping mall, multiplex, hospital, school and most of the necessary amenities within walking distance. Now he gets time for his family and friends as he has cut down his commuting time.
Integrated township projects are slowly gathering momentum as the concept of walking to work is picking up among city dwellers. Apart from the change in family structure (from joint family to nuclear family), growing income levels have led to a change in consumer profile. More consumers want plethora of amenities; such as, swimming pools, clubs, landscaped gardens, 24 hours security and housekeeping. Due to huge demand coupled with economies of scale, an integrated township offers all these amenities and at a relatively low and affordable price.
Since such projects have their own infrastructure, they do not depend heavily on amenities provided by local Municipal Corporation. These townships usually have their own sewage management, water supply and overall maintenance of the immediate surroundings. The maintenance of integrated townships is centralized and managed very well. Also, since such residential projects have strong security measures to protect the entire area under township, people are assured of much higher levels of safety for themselves, their families and possessions. Since all the construction work is centralized there is very little room for variation in construction standards.
These townships provide win-win situation to developers. Developers in India have understood that in order to lure their customers they have to provide housing with all the required amenities. Thus, the future lies in INTEGRATED TOWNSHIPS DEVLOPMENT. What do you say?
urban Sustainability
Posted by Neha Verma in Uncategorized on December 28th, 2011
As an Urban Planner working for the last 5 years in small and big cities I have understood one thing that in order to reclaim the aura of Indian cities that existed in past, it is pertinent to focus on sustainability in energy usage, transportation and city administration while implementing any new policies. So, my big idea for cities in 2012 is encouraging urban sustainability that would help in improving the plight of our cities. Lately we have seen a sudden upsurge of new cities encouraging new urbanism and sustainability but while building new cities we should not forget our close to 3,500 cities that requires immediate attention. In this blog I would specifically mention those cities that already existed and requires strong policy measures for sustainable development and its successful implementation.
Sustainability is not a recent fad in India; infact city planning started early- almost 4,500 years back, with the Indus valley Civilisation. The cities of Mohen jo Daro and Harappa were amongst the world’s earliest and most unique examples of urban design but unfortunately in modern India, development in towns and cities has somehow not kept pace with the sustainability measures.
With globalization and increasing job opportunities in metropolitan as well as tier II and III cities, people from villages and small cities are tempted to migrate for better standard of living. Since, core areas in existing cities are already congested with no space for proposed housing, development authorities and private developers are building housing in suburban areas that leads to problems related to pollution and congestion from private vehicles commuting to core areas for work. Without adequate transportation facilities such as BRTS and TOD’s people rely on their private vehicles for transportation that can have significant impacts on the city’s environment. Vehicles account for between 20% and 25% of the world’s energy consumption and carbon dioxide emissions. Thus while expanding our city limits to accommodate more people it is important to encourage sustainability in commuting systems by introducing BRTS, local rail system, pedestrian friendly walking, cycling, transit oriented development.
Energy usage in a sustainable manner is another focus area that can help in building sustainable cities. With depleting water and power resources it is important to encourage renewable power sources such as solar energy and wind energy to meet power requirements in residential and commercial buildings. In India many states have started giving incentives for developers promoting these technologies in their projects. Besides that, encouraging rainwater harvesting and efficient storm water management network also leads to sustainable development in cities.
In order to achieve all the above stated objectives, it is important for Urban Local Bodies (ULBs’) to strengthen their financial position by improving their efficiencies in order to ensure sustainability of infrastructure investments. We can build new cities by encroaching natural habitats but if we don’t make our city administration strong and effective it would be difficult to tread on the path of sustainability.
While planning for an Urban Sustainable city, it is critical to analyse proper urban planning and Urban Sustainability while proposing any new policy for development. The success of the urban sustainability depends mainly on efficient ULB’s and inclusive development with appropriate funding mechanism in place. A joint effort by the governments, civil society and the private sector and an impartial political interest with a national vision only can save the urban centres of India from the challenges associated with climate change and population impact.
future in prefab tecnologies
Posted by Neha Verma in Uncategorized on December 25th, 2011
The World is changing. The pace at which activities were performed in past is now expected to complete in zilch due to advanced technologies. Construction sector too is getting advanced using prefabricated technologies that reduces both overall cost and time of construction. Developers are keen in using these technologies for low cost or affordable housing as this could provide them better returns on investment as compared to conventional mode of construction.
Prefabricated building structures can be assembled at a site or offsite at a very high speed. For instance, around 1,000 sq. ft. of residential building can be erected on site in approximately two to three days. These structures are strong and have life of approximately 30 years, which is comparable to any on-site built structure. Many Real estate developers have started setting up prefabrication plants onsite as well as offsite to speed up construction and cut project costs as an acute shortage of labor and a rise in raw material prices threaten to wipe out the industry’s already low margins.
Despite of umpteen advantages, prefabricated building technology has not gained momentum in Indian market due to lack of awareness. Many consumers carry a wrong notion that prefab limits the design choices as there is lack of flexibility on on-site design changes, which is not true.
With so much demand in affordability housing sector, it is important to promote prefabricated technology and develop a supply chain that would help both manufacturers and end consumers in attaining its maximum benefits.
Embracing new construction technologies
Posted by Neha Verma in Uncategorized on December 2nd, 2011
India is a land of opportunities; opportunities for those people who want to contribute their efforts in providing better quality affordable housing solution for common man. With such a high density of people in urban areas along with huge pressure on natural resources; it is a pertinent to provide affordable housing without compromising on sustainable approach towards environment.
Driven by increasing urbanisation, rising incomes and decreasing household sizes, the residential demand in India has been on an upswing over the past few years. The Working Committee of the 11th Plan (2007-12) has concluded that the total shortage of dwelling units at the beginning of Eleventh Plan Period i.e. 2007 was 24.7 million with more than 70 per cent of the shortage of dwelling units is for middle and low income brackets. Unfortunately this figure is often overlooked by development agencies because of lower profitability as the construction cost of buildings built from conventional construction technologies is very expensive and affordable housing doesn’t generate better returns for these agencies.
At present, our construction system is outdated and time consuming; since it takes long time to construct a building due to old and conventional techniques, the overall cost of construction rises which ultimately is borne by developers who ultimately have no choice except escalating the price of property; thus these properties are seldom affordable to people.
This solution to the above problem is the development of a faster, more efficient, and sustainable technology to address India’s affordable housing shortage, one that could stimulate large scale industrialization of prefabricated technology in the housing industry. The primary cost benefits of prefabricated structures derive from the speed of construction and the optimisation of raw material. Integrated engineering design and detailing enable prefabricated buildings to be erected at a fraction of the time than a conventional building. These time savings contribute to lower interest during construction and have the advantage of commencing commercial activities far earlier. The optimisation of raw material reduces the material cost of the building, and the lighterweight of the structures brings about significant savings in the foundation cost. Avoiding complexities, a pre engineered concrete building efficiently replaces conventional methodologies of constructing a building. Thus, with these modern methodologies, large buildings do not require years for construction and finishing.
The low cost construction technologies can be used in several affordable mass housing schemes such as Rajiv Awas Yojna (RAY) that have already been undertaken for urban areas. This beneficiary of this scheme is entitled to the financial assistance of Rs. 45000~ $1,000for the construction of house. In order to construct house at such a nominal cost requires an innovation breakthrough in construction technology. All over the world efforts are being made to design a house which is liveable, sustainable and involves low cost of construction. Recently, students in Massachusetts Institute of Technology attempted to design a low cost affordable house for people. They named this project as “1K house.”
Projectwell Management Pvt. Ltd. along with the world’s renowned architecture firm KieranTimberlake proposed India Concept House (ICH) which is affordable, solid, sustainable, and quick-to-erect housing solution for Tier II and Tier III cities in India’s composite climate zone. The ICH addresses a new market, one that pairs a shortage of 19.4 million housing units with the need for sustainable growth. This is a single dwelling unit house in sizes of 38, 68 and 98 SqM, which are modular, built from manufactured panels, with integrated services components like electrical and plumbing. The components of ICH include a wall panel, door panel, window panel, partition wall and roof plank. These components use precast concrete technology, designed to be factory made and assembled on site.
Thus, changing conventional technology to new quick-to-build technology in construction industry is the need to this hour and developers have also now started experimenting with these technologies. It is important to embrace these new technologies to projects in order to fill the housing gap in urban areas.
subsidies in interest rates
Posted by Neha Verma in Uncategorized on November 3rd, 2011
With increase demand for affordable housing units in recent years; government has started showing their interest by intervening and improving in existing policies and affordable loan mechanisms. In this regard, the government’s decision to extend its 1% interest subvention scheme to small loans of upto Rs. 15 lakhs for houses costing upto Rs. 25 lakhs, close on the heels of the RBI raising the repo rate, is meant to help home loan buyers. The scheme provides interest subsidy on housing loans as a measure to generate additional demand for credit and to improve affordability of housing in the lower and middle income groups. With increasing urbanization and migration of people from small cities to large urban areas for better opportunities has opened doors for developers interested in experimenting with affordable housing. As many as 26 million homes are projected to be required by 2012 to meet the existing housing need, and 99 per cent of these homes are needed by households in the Economically Weaker Sector (EWS) and Lower Income Group (LIG). If the current increase in backlog of housing is maintained, a minimum of 30 million additional homes will be required by 2020. While some housing demand will be taken up within the existing housing stock, many millions of homes will need to be built across the country to fulfill the vision of becoming slum-free.
A subsidy on home loans is in order as the housing sector is one of the key drivers of the economic growth. Policy initiatives are needed to spur investments in this sector, especially at a time when inflation is hurting people and growth is slowing down.
This subsidy on small home loan borrowers will increase affordability, and also impacts positively the quality of urban life. It also indirectly helps industries such as building materials, home furnishings and appliances; just as expenditure on roads is an indirect subsidy to cars and two-wheelers.
But at the same time, interest subvention is not always the right policy tool, even if the goal is to soften the blow on home buyers whose monthly installments will rise as the result of RBI’s latest rate hike. A subsidy on interest to the housing sector could trigger similar demands from other sectors and this should be avoidable.