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Policy Initiatives for Rental HousingPolicy Initiatives for Rental Housing

a presentation by

V SureshHousing & Urban Development Specialist,

Principal Executive Officer, HIRCO

and Former CMD, HUDCO

Conference onConference on“Rental Housing: The Challenges and Opportunities”“Rental Housing: The Challenges and Opportunities”

Organised by NAREDCO and Ministry of HUPA

23rd September 2011

India Habitat Centre, New Delhi

9300

68836100

5667(82%)

4900(80%)

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2000 2010 2020 2030 2040 2050

World Population TrendsWorld Population Trends

8200 (88%)

DEVELOPING COUNTRIES

(in millions)

Source: UN Population Division; WORLD POPULATION PROSPECTS

Population Reference Bureau: WORLD POPULATION DATA SHEET

Population in and developing (lesser developed) countries to be 88% of total population by 2050

Urbanisation Scenario in IndiaDecadal Growth Rate of Population (1991-2001) UrbanUrban: 31.13% RuralRural 17.97%

1027 M11 May, 2000,1000 M

1 March, 2001,

1350 M

361330 M

540 M(40%)

393(33%)285.35

(28%)217.61

(25.71%)

62(17%)50 M (16%)

0

300

600

900

1200

1500

1947 1951 1961 1971 1981 1991 2001 2011 2021

Total Urban

Urban Explosion

� Censes of India 2011 has announced India’s population at

121 crores (more than projection given earlier )

� We are growing at the rate of 2 crores per year !

� India’s Urban population will double from 28 crores in 2001

to 56 crores in 2021

� Along with that the Challenging Development needs

India : Million plus Cities and Urban Agglomerations - 2001Category City

10 Million+ (3) Greater Mumbai, Kolkata, Delhi

5 – 10 Million (3) Chennai, Bangalore, Hyderabad

3- 5 Million (2) Ahmedabad, Pune, Surat

2 – 3 Million (5) Kanpur, Jaipur, Lucknow, Nagpur

1 – 2 Million (22) Patna, Indore, Vadodara, Bhopal, Coimbatore,

Ludhiana, Kochi, Visakhapatnam, Agra,

Varanasi, Madurai, Meerut, Nashik, Jabalpur,

Jamshedpur, Asansol, Dhanbad, Faridabad,

Allahabad, Amritsar, Vijayawada, Rajkot

35 million plus cities/ urban agglomerations-70 by 2021

• Cities make an important contribution to social and economic development at national and local levels.

• cities are important engines of economic growth – 70% GDP

• cities absorb two-thirds of the population growth

• cities offer significant economies of scale in the provision of jobs, housing and services

• cities are important centres of productivity and social advancement

Cities and Growth Engines

India – Robust Economic Growth

• GDP Growth Averaged 8.1%– last 3 years

• Disposable Income – multiplied 5 times from 1995 – 2005

• 350 Million and still Growing Middle Income triggering

aspirational upward mobility

• Foreign Exchange Reserves US$ 250 billion +

Housing for All – National Priority

• Housing for All – priority area for National Agenda for

Governance

• Housing has received a big boost with quantum jump in

housing production in the last 5 years

• Housing finance at affordable interest rates – some rise

• However housing becoming beyond the reach due to input

cost of land, infrastructure and building – 50% more than

inflation

Size of the Housing Pie


1

High Income



1

2

High Income

Middle Income



1

2

3

High Income

Middle Income

Low Income



1

2

3

4

High Income

Middle Income

Low Income

Weaker Sections

• Urban Housing shortage increased from-3.60 million – 19617.00 million – 1981

16.00 million – 200122.40 million – 200726.53 million – 2012

• Massive investments of over Rs. 5,50,000 croresneeded.

Housing Needs

Growth in Institutional Finance Flows

� Institutional Finance Flows Rs. 5000 crores (1998)

to Real Estate Sector (US$ 1.07 billion)

Rs. 14100 crores (2000)

Rs. 19100 crores (2001)

Rs. 23900 crores (2002)

Rs. 42000 crores (2003)

Rs. 54000 crores (2004)

Rs. 70000 crores (2005)

Rs. 98000 crores (2006)

Rs.110000 crores (2007)

� 30% Compounded growth

� Including investment of promoters, investors and debt flows annual

investments would be Rs.1,50,000 crores (US$ 31.2 billion) (Source: NHB)

VS

• Government Sector• Public Sector (Housing Board,

Development Authorities, etc.)• Co-operative Sector• Corporate Sector• Private Sector• Individual Sector

Housing Delivery Options

15

VS

Only 1 out of 10 houses generated through Government and Public Sector initiatives

There is an imminent need for strengthening and expanding housing through other options including partnership modes

Why?

Housing Delivery Options

16

VS

Rental Housing has been a major contributor to theHousing needs in Urban areas to extend of 35% to55% of the total housing depending upon the size ofthe cities:-• Small & medium towns• Metro cities • Mega cities

This is all the more conspicuous in Tier – I and II cities

Housing Options – Ownership vs Rental

17

VS

Extremely popular product• UK - 40% (Council Housing, Housing

Associations, Private Sector)

• Netherlands - 55%

• Austria - 45%

• Denmark - 51%

• Germany - 60% (ex FRG + DDR)

• Sweden - 39%

Rental Housing Options – Global Trends

18

VS

• Rental Housing is not developed as needed

• There is No organised Rental Housing in India

• Only – individual housing / flats being rented

• Employer driven Rental Housing

- Government Rental Housing (Central Pool / Railways / Defence / State Govt. Rental )

- Police Rental Housing

- Public Sector and Private Sector Rental Housing

Rental Housing Options

19

VS

• Builder (public- private) built rental housing needed as in Europe / US. The product still not available excepting for Tenement Housing for Public done by some Public Housing Agencies or Chawls for Low Income Needs.

• Service Apartments - Late Starter but only for the super rich / MNC

Rental Housing Options –Thrust Areas Needed

20

VS

• 1BR/2BR Rental housing stock in large number needed for metro / mega cities

• This is one of the major potential area for rental housing for age group of 21 to 35 working in BPO / IT / ITES, Banking, Financial, Manufacturing and other Services sector

• Potential also for lower end of Service Apartments for young Executives with transferable jobs

• There is a large appetite from Corporates and OrganisedEmployers for providing housing for prospective employees in big cities


21

VS

• There is also another demand sector – students of variousprofessional colleges and Universities (Medical,Engineering, Technology, Management, Law, etc.), wherehostel accommodation is very limited

• Residential buildings are taken and 2 to 3 packed up ineach rooms

• Similar Rental Housing for floating population cities ortourism / healthcare facility cities (short terms of 1 to 3months)

• Single working Women ( 20 to 35 yrs) need special rentalhousing with sensitive planning needs as workingWomen’s Hostel do not take care of even 30% needs


22

VS

Housing Enabling Reforms

Once Housing Property gets developed there are many inhibiting factors which discourage housing

development

• Rent Control Laws (Good for the Owner and Tenant and sufficient to cover

annual maintenance costs and assets and facility management costs)

• High Stamp Duty for registration

• Higher Levels of Annual Property Tax and Procedures

• Latest BMC provisions draconian23

Towards Towards Sustainable Sustainable and and

Balanced Housing Balanced Housing Development Development --Ownership and Ownership and

RentedRented

Thank you for your kind attentionThank you for your kind attention

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