Affordable housing in India

Chris McLaughlin, MD of MIS AMS 

 Earlier this year, I was asked a question I haven’t been asked in many years, since school in fact: would I like to attend a study trip? However, the offer on the table wasn’t the standard trip that would hark back to those of my school days that involved a coach, a packed lunch and a waterproof anorak. This was a trip to Asia, specifically travelling around India, organised by the Chartered Institute of Housing. After consulting my MIS AMS peers, it was decided it was an opportunity not to be missed.

 In the meantime, I did my homework and became somewhat fascinated by India and its approach to housing, and the lack of any housing association model being in place across the country. 

Housing for all 

India’s ‘Housing for all’ scheme is the vision of Prime Minister Narendra Modi. First launched in June 2015, the scheme’s main aim is to build 20 million new houses by 2022. The trip on which I and many other top figures across the UK housing associations sector were to embark, had a diary packed-full of talks, meetings and what looked like an unmissable opportunity to gain insight into a country that is set to change dramatically over the next few years.

 The situation currently is that the country has focused on building properties for the rich and with only a few property developers ‘dabbling’ in some form of property investment or development for the less well off.

 One company working extremely hard to offer affordable housing is VBHC, Value Homes Private Limited (formerly known as Value and Budget Housing Corporation Private Limited) which was founded and incorporated in July 2008 by former chairman of Mphasis, Mr. Jaithirth (Jerry) Rao and former consumer banking head of Citibank Mr. P. S. Jayakumar.

 The company works with the explicit objective of fulfilling an urgent need in the housing market. VBHC sees its work as a solution to the overwhelming problem of providing housing for India’s urban poor. We ventured to meet the chairman and see the offices and sites of VBHC in our trip. The company has 10 current projects underway and around 15,000 homes being developed this year, with three of their projects already completely sold out. Unfortunately, in India’s rapidly developing cities, affordable housing is still in short supply. Theirs is a shortage of 18 million homes across the country of which 15 million are needed for low-income families earning less than 16,000 Indian Rupees ($250) a month. This is something I found hard to contemplate – the western world can be very quick to spend its earnings on material items, whereas millions in India would just like a roof over their head.

 

Technology – what technology?!

 Obviously one of the things I was keen to learn more about was the use of technology in India’s housing sector. It soon became apparent technology was not wisely used – mainly down to the fact that labour was so cheap, it was easier for developers to employ vast amounts of men rather than using clever machinery to build their properties.

 But as international methods are being adopted slowly in bigger property projects, I imagine in time there will be a big change. Methods such as dry-wall techniques, pre-fabricated construction and Mivan shuttering are being widely seen, so I predict it won’t be long before India becomes more tech-savvy in the housing sector.

 One thing that was obvious when I toured the different areas was how friendly everyone is and how relaxed the rules around Health and Safety are! I saw many a bamboo scaffold and very few harnesses or safety hats in use.

 I also learnt that like in the UK, India struggles to keep skilled staff, because once they are trained up they tend to move on or be head-hunted. Also the build cost of the properties was astonishingly low, it costs roughly £12.50 per square foot to build a home, so it was no surprise that when developers build, they build in vast amounts.

 

Built to sell

It was very clear from all the talks and visits that I attended, that houses in India are built to sell. Most properties that are completed are seen to double their value in three years, so some developers are not even phased if their builds are not sold right away, as their value continues to grow.

As India’s population continues to expand and more people move to its cities, affordable housing is going to become ever more important. With the lack of a rental market in place, this has made it almost impossible for a housing association model to be born. I imagine that there is one on the horizon – it would make housing affordable for those who are currently living in slums, and slowly start to narrow the gap between the rich and poor communities.

I thoroughly enjoyed my trip and it has given me a wider understanding of the country and its approach to housing. I would advise anyone who is lucky enough to be invited on a trip with the CIH to say yes and pack his or her bag quickly.