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Every dog has its day. During times of economic turmoil long forgotten concepts, ideas, ideals, consumer segments and target groups are dug out from their graves, only to be repackaged by fresh wrappers and sold as the next best thing to happen.

Nothing wrong with that. Businesses are driven by opportunities and competent businesses will try every inch to encash them as they unfold. What is important, however, is to understand if those opportunities are encashable and whether there is a case for a viable business model that facilitates optimum exploration of those opportunities.

Affordable housing is not just a fad concept but a burning need in India. It has always been so. Even during the boom times of 2002-2007, many marginalised sections of the society as well as those who were unable to catch up fast enough with the happening sectors, felt an acute need for more affordable housing which could match their pockets. Housing prices skyrocketed and buying a home in metros was just out of reach for many. None of our builders spoke of this current buzzword- Affordable housing- then. So what has changed now?

Very clearly, sales of 40lacs + homes have taken a severe beating in the last few months. Many of our builders, who catered to this segment, are now experiencing a dry revenue tap. New jobs as well as the perception of job security dipped in several sectors notably in IT and ITES. On the contrary, incomes from government jobs have risen handsomely due to the implementation of the 6 th pay commission and other such events. Not to say that govt servants now earn more than their private sector counterparts. But their lifestyles have changed for the better and there is an added luxury of job security which makes future investments less complicated. It is important to note that this segment can really give a fillip to the market in the sub 30 lacs homes category.

It is this segment coupled with Private sector employees in the junior cadres that has now created a viable customer base for these homes. Naturally, all eyes are now focussed here.

But is this opportunity encashable? Can India see a revolution in affordable housing in the immediate to short term? Unfortunately, the answer is an affirmative NO. Here is why it is so.

Affordable housing as a product can not be introduced as a knee-jerk reaction to changing market needs. If a mobile phone in the Rs 10,000/- bracket does not sell, the producer can immediately tone down some features and introduce another in 5000/- range. It is not possible with housing to do the same.

LAND PRICES : Since affordable houses can not come up in central areas, we will only discuss suburban land prices here. Sure, land prices have corrected in suburban areas by 25-30%. But the problem with a majority of our builders is that they have bought huge chunks of land during the boom times of 2002-2007 at prices higher than the present corrected prices. Also add interest on the acquisition costs for the last few years. Hence new land parcels have to be acquired to do affordable housing. But where is the money?

BUILDING MATERIAL COSTS : Cement is still ruling firm though iron and steel have corrected. Other building material like tiles, pipes, paints, sanitary fittings etc have not yet corrected significantly.
LABOUR COSTS : Still remain firm.

INFRASTRUCTURE : The local governments can actually play a very significant role in affordable housing by connecting newer areas by rail and road and by reducing the commuting time from newly developing areas. Unfortunately, as all of us know, we have no hope in this regard.

BUILDER MENTALITY : Take top 50 builders in India. Look at all of them closely. You will see that not one of them would have done affordable housing projects in the last few years. Their talk of the same now can be termed as sheer kneejerk nonsense.

ARCHITECTURAL CAPABILITIES : I am not an expert in this. It is quite possible that some of our architects can come up with some innovative concepts which can drive costs down while keeping quality up. But there is reason enough to say that we have no history of quality affordable housing in the immediate past.

CONSUMER EXPECTATIONS : They have skyrocketed in the past few years riding pillion on the back of good times. Nowadays nobody wants an apartment without a swimming pool and gym. Never mind if he is skinny and suffering from hydrophobia. Nothing less than Italian marble will do. And of course the place has to be close to schools and malls. And oh yes, the hall should be spacious enough to host a Friday party. An indoor squash court is a must. And a little garden for the children to play! Other wise what will the colleagues think? And who knows what his aunt will say after going back to Jalandhar?

Not surprisingly, all our builders are working around with only those levers which are now available. Reduce the flat size to 800 sft, build more flats in the same piece of land and build them in land parcels where you can’t do anything else anyway. If this is affordable housing, God save all of us.

Affordable housing has to be an ideology which has to be worked upon and sustained in the long term. And it demands critical performance from the government, builders, building material manufacturers, construction professionals, financing bodies and many other stakeholders including the consumers.

A TATA Nano will take birth only if there is a burning passion to create it and if the efforts are sustained with unwavering commitment over a period of 4-5 years. Affordable housing can not be any different.

India has a long way to go before we see some meaningful efforts on affordable housing.