zameenkaushar2009

After affordable property comes rental housing, which seeks to serve two categories — the migrants and the not-so-creditworthy populace, says VANDANA RAMNANI

After combating the economic slowdown for months, the developers finally zeroed on a fast moving realty product - affordable housing. Eureka! The volume of sales shot up by25 per cent. The success with the right product mix at the correct price point prompted them to continue the good work at the bottom of the realty pyramid to revive the much-needed cash flows. The task this time round is enormous — to work in tandem with the government to decongest the main cities and halt the proliferation of slums through the mechanism of rental housing.

Taking the lead is Housing A Development and Infrastructure Limited (HDIL) and Mumbai Metropolitan Region Development Authority (MMRDA).The two have come together combating the economic slowdown for months, the developers finally zeroed together to build Mumbai’s biggest rental housing project, perhaps the first in the country. Both entities will develop 525 acres of land in Virar and build rental houses for about 43,000 low-income families. HDIL will also be free to build another 90,000 houses that it can sell at market price to recover costs. The first 10,000 units will be ready by March 2011.Each house will be of 160 sq ft carpet area and will be built in self-contained units in 14 storied quake-resistant buildings. The rental houses will be allotted to interested candidates through a lottery system. The monthly rent will range from Rs 800-Rs 1,500, depending on the location.

Realty experts point out that rental housing schemes can be replicated in other cities too, especially in areas where migration takes place in large numbers both in the case of students and labourers. The scheme can also go a long way in serving two categories — the migratory and the not-so-creditworthy populace. Besides, it can only be successful through the private-public partnership model as the resources to sustain the huge volumes are available only in the public domain.

Incentives can ensure its success

According to Sanjay Dutt, CEO (Business) JLLM, it all started with new launches in the affordable segment followed by low-cost housing projects launched by some developers. This created vibrancy in the realty market.

The rental housing scheme could be launched in Mumbai because there are benefits unique to Maharashtra. There is a significant population that migrates to the state and can not afford Mumbai rentals. This scheme will benefit the lower income and the lower mid-income group.

Major metro cities such as Bangalore, Pune, Chennai and Kolkata are hubs for progressive states and absorb about 2030 per cent of the migrant populace. The government facilitates land and creates a pull through incentive structures. One will find more private developers taking advantage of such opportunities if the government takes the lead in terms of incentives and facilitation. The rental housing scheme is a pilot project and if regulated the right way, it can be a huge success, adds Dutt.

PPP the right engine to sustain high volumes

Adds Paresh Chawla, Associate Director, Real Estate Practise, E & Y, the intention of the Maharashtra Government through this scheme is to provide land and housing structures to be put in place by the private developers where migrant labour can stay. If any other state government decides to plan something of this magnitude, it can be successful only through public-private partnerships, necessary to sustain the volumes.

This initiative is particularly useful for providing temporary accommodation to the people who get displaced during redevelopment or slum rehabilitation projects.

Arrests proliferation of slums

The concept can work only in cities where the migrant population is large and in townships or cities where a huge amount of labour is expected. It can be set up in states where there are general manufacturing industries such as Gujarat, the outskirts of Delhi and Kolkata. Rental housing townships help in absorbing labour better and arrest the volume of slums by providing alternate accommodation.

Concurs Amit Bhatt, Town Planner, “The concept is good. It is likely to be successful in magnet towns where people come to reside on a temporary basis, primarily because of a job or to acquire good quality education. This is a new trend and a fantastic opportunity to be tapped. This can be successful only through a public private partnership model as resources for a large scale project are available only in the public domain.”

Serves the not-so credit worthy

In the current market scenario, developers need a mechanism to generate revenue and hence the emphasis on affordable housing. Rental housing goes a step further. It not only offers immense opportunities but also brings in the much needed revenue, he adds.

Dr P S Rana, former chairman, HUDCO, is of the view that rental housing is a must for two sections of society the migratory and the not-so credit worthy populace who cannot get a loan from financial institutions. The large community of migrants, those with transferable jobs, migrant workers and students need affordable renting accommodation.

If fiscal incentives on rental income are provided, fresh rental stock can emerge for this segment as well.

The government can con tribute by providing fiscal incentives, increase the supply of service land through proper rules and decontrol, he adds.

Engagement a must

However, it is essential that realty players do not go on a rental housing overdrive. Proper planning, consent and engagement of the populace their product will serve is important.

Points out Rumjum Chatterjee, Managing Director, Capacity Building Division, Feedback Ventures, “When we relocate people, they need not be bundled 40 kms away as their livelihood is impacted.

Planning, consent and engagement is necessary to ensure that they are not worse off than before. It is important to ensure that rental housing seeks to improve their lives and not the other way round.”

Courtesy:- HT dt:- 27-06-09