As many as 1.25 lakh houses, each upwards of Rs5 crore, are coming up in the five kilometre radius of Worli to Sewri. “Who are these people buying these luxury flats?” asked Chandrashekhar Prabhu, a housing activist.
Prabhu was moderating the session on Affordable Housing at the State Summit: Vision for a Global Maharashtra, held at Hotel Taj President on Saturday. The session was chaired by former chief minister and former Lok Sabha speaker, Manohar Joshi. The panelists included Sitaram Kunte, secretary, housing, government of Maharashtra; Pranay Vakil, chairman, Knight Frank, a global realty consultancy firm; and Sunil Mantri, president, Maharashtra Chamber of Housing Industry, and managing director of the construction firm, Mantri Group.
Sceptical about the possibility of affordable housing in Mumbai, Prabhu said, “According to national statistics, there are 1.2 lakh people who have a disposable income of Rs4 crore plus.”
He said Mumbai has got its act wrong over the years. “I have heard about how increasing FSI will bring in more supply and bring down the realty rates. I have only seen FSI going up, a trend also seen in property rates,” he said.
Joshi, the chairman of the session, concurred with Prabhu. “Are we really looking to provide affordable housing? Then we need to bring in policy reforms. But is the state really interested?” Joshi asked.
“Even a hut today costs Rs25-30 lakh. The state announced the housing policy in 2007, but not even 5% of this has been implemented,” Joshi said. He even suggested, contrary to his party Shiv Sena’s position, that apart from people from outside the state being controlled, there should be thought given to people coming from within the state to Mumbai.
Pranay Vakil, chairman, Knight Frank, said, “Any individual who pays more than 50% of his take home as EMI is in a red (or danger) zone.” He felt the solution to providing affordable housing lay with “reverse tendering”, called for by Union minister for housing and poverty alleviation, Kumari Selja. Reverse tendering is a concept where the land allotted for auction is given to the bidder who pays the base price and promises the maximum number of affordable houses he plans to build and hand over to the government. In this process, the base price could be the reserve price itself, but the clincher for the bid-winner would be the number of free houses that he can offer to the government. Vakil said the first instance of reverse tendering is coming up in Jaipur.
Kunte said a major hindrance in affordable housing was unavailability of land. He said, “Often, the delay in aggregating actual land and virtual land like the FSI and TDR makes the cost of the end property beyond the reach of the people. According to a report by McKinsey & Company, the process of land assembly dents the GDP by 1.3%.”
Mantri said the FSI be increased to a minimum of 6 and a maximum of 10. “The transaction cost for a developer is close to 20-25%. If this is not brought down, it will be difficult to undertake low-cost housing. Also, for township projects, the sanction has to come from the highest authority in the state; thus power should be delegated to expedite the process,” said Mantri.
Rental housing came up as an alternative to ease the cost. Vakil said 25-30% of the floating population in every city is not looking for buying homes. But rental housing yields are low thus developers are giving it a miss. The present yield on rental housing is mere 3-5%.