Haryana shows Indian States the way in affordable housing

In 2012 the Union Ministry of Housing and Urban Poverty Alleviation estimated a housing shortage of 18.78 million houses during the 12th period plan, with 99 per cent in the economically weaker section (EWS) and lower income group (LIG).

The Pradhan Mantri Awas Yojana (PMAY), which was initiated and is being implemented by the Government of India with the objective of promoting housing for all, estimates that demand for housing in urban India is 11.22 million houses for the period from 2015 to 2022.

The Union government's policy support and intervention and increase in household income also improved the overall affordability levels in the last two and a half decades in India. Affordability to buy a house was at its best in 2021 with an affordability ratio of 3.2, which has gradually decreased since 1995, when it was 22.

The supply of affordable segment categorised by ticket size below Rs4 million has witnessed year on year growth except for year 2020, which was impacted due to Covid-19 pandemic.

Total supply of affordable units (ticket size less than Rs 4 million) and mid-segment units ( Rs 4 million - Rs 8 million) from 2017 to 2021 in top seven cities was approximately 0.68 million units, which is 72 per cent of the total supply, which indicates significant preference of affordable and mid-segment category of housing.

The year 2021 witnessed an annual increase of 34 per cent from previous calendar year in the supply of units in affordable and mid- segment category as per government data.

Haryana: Best affordable model

The Haryana model of affordable housing has been the most successful one in India so far and witnessed tremendous progress in terms of on-ground deliveries. There is a learning that all other Indian states may pick up from the Haryana model for affordable housing in terms of high rise and low rise to address the housing problems.

The Government of Haryana had announced two policies and updated the same so as to encourage the development of affordable residential units in the state.

These include the Affordable Housing Policy (which is for high-rise group-housing) and Deen Dayal Jan Awas Yojna (affordable Plotted Housing Policy which is for plots and low-rise independent floors). Under the latter, the Government of Haryana has planned to build 0.2 million homes by 2022.

The policy was launched in February 2016 for low and medium potential towns of Haryana such as Karnal, Kurukshetra, Ambala City, Ambala Cantt, Yamuna Nagar, Jagadhri, Bahadurgarh, Hisar, Rohtak, Rewari, Bawal-Dharuhera Complex, Gannaur, Palwal, Hodel, controlled areas declared in Faridabad District (excluding the controlled areas of Faridabad-Ballabgarh Complex), Oil refinery Panipat (Beholi) and Controlled Areas forming part of the Development Plan, Prithla. The policy was extended to the final development plan of Gurugram Manesar Urban Complex – 2031 (Gurugram) in September 2019.

The policy offers higher FAR of 2.25 as compared to the FAR of 1.75 for normal group housing projects; there is a waiver on license fee and infrastructure development fee.

To attract developers to participate in the scheme the state had increased the commercial component from 4 per cent to 8 per cent of the Net Planned Area at 175 FAR to be sold in open market. The objective was to further enhance the profit margin of the developer.

Considering the rise in raw material cost, Haryana had increased the price from Rs 4,000 per square foot to Rs 4,200 per square foot for carpet area and increased the price of balcony area from Rs 500 per square foot to Rs 1,000 per square foot, capped at Rs 100,000 per unit.

Delhi-NCR is a goldmine

With a population of more than 46 million and spread over 53,000 square kilometres, the urban agglomeration of Delhi: National Capital Region (NCR) has witnessed urbanization level of around 62 per cent. This urban agglomeration is also the country's largest planned region.

There are growing needs about the provision of adequate and up to date urban infrastructure and basic amenities, with NCR's urbanization rate being almost double of the national level. Various national and state level imitative have been provided to the target segment of the population.

Around 99,534 units were launched in the affordable and mid-segment (ticket size less than INR 80 lakh) in NCR during CY 2017 to CY 2021 period.

Girugram was the key contributor and accounted for 41 per cent of the overall affordable supply in NCR during CY 2017 and CY 2021 period. In the past 5 years the absorption level which cumulatively for last 5 years stood at 1,58,916 units has outnumbered supply (99,534 units) in the affordable and mid-segment category, which suggests there is sustainable demand in this category.

Gurugram shows the way and results

Gurugram has been one of the most active real estate markets in NCR in terms of residential supply. Of the total units launched in NCR in 2021 (31,706 units), it comprised of 58 per cent share (Source: Anarock Report).

It added as many as 18,542 units in 2021, thereby seeing a rise of 66 per cent over previous year. Of the total units sold in NCR in 2021 (40,053 units), Gurugram comprised 39 per cent share. Gurugram sold as many as 15,590 units in 2021, thereby seeing a rise of 115 per cent over previous year. Over the last three years, it has had the highest absorption in the three cities (Gurugram, NOIDA and Greater NOIDA). Many launches here were in the form of plotted projects and units with additional spaces like study room, to address the need driven by work from home concept.

The cumulative units launched in the last three years, from 2019 to 2021 period based on monetary terms in NCR is Rs 591,000 million, wherein Gurugram's share was approximately 63 per cent, the highest amongst all other regions.

In 2021, the city witnessed a total sales value of Rs 121,540 million, which was almost 45 per cent of the total sales in NCR. In fact, the increase in the total absorption value was more than twice the previous year, and was also the highest among the three cities, indicating relatively quick bounce-back of demand in Gurugram, compared to other cities in NCR.

Though several top real estate developers stayed away from affordable housing high rise and low rise, select developers such as Signature Global promoted by Pradeep Aggarwal (Chairman, Assocham – National Council on Real Estate, Housing and Urban Development) and family accepted the challenge and reaping the benefits.

The total sales of combined micro markets in Delhi NCR from 2019 to 2021 was 1,10,179 units. Out of this, the total share of Signature Global consolidated from 2019 to 2021 stands at 9 per cent (Source: Anarock Report).

The total supply of combined micro markets in Delhi NCR from 2019 to 2021 is 85,514 units. Out of the total NCR supply, Signature Global Group has 13 per cent market share (all budget category). Approximately 15 per cent of the total market share is by four other developers (13,051 units). Signature Global has the largest market share in the segment in Delhi NCR. (Source: Anarock Report).

Key growth drivers

The key growth drivers for Gurugram include strong economic setup of corporates. Development in Gurugram accelerated with the development of NH-48 in 2008. It was followed by other prominent infrastructure initiatives like Delhi metro extension, Rapid Metro, Signal free corridor in Golf Course Road and Cybercity, and Kundali Manesar Palwal Expressway.

The NCR currently has air connectivity through Indira Gandhi International Airport, which is located on the border of Gurugram.

It is observed that many of home buyers buying houses in peripheries of NCR including Gurgaon are migrating from Delhi because of improvement in connectivity in these areas and availability of new and integrated residential facilities with amenities.

With the Haryana portion of the Delhi-Mumbai industrial corridor and the Sohna elevated road likely to be finished by next year (2023), it is estimated that the real estate sector will see a major development as these projects improve access, create jobs and allow people to move with ease.

The micro market will get adequate connectivity with corporate hub of Gurugram, educational institutions and recreational developments in and around the city.

(Kalinga Nath is a Mumbai based senior journalist)