CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA A services oriented model for creating affordable housing projects “By the time the nation completes 75 years of its Independence, every family will have a pucca house with water connection, toilet facilities, 24×7 electricity supply and access” PM Narendra Modi www.MakeMeBuilder.com Mentored by
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CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
A services oriented model for creating affordable housing projects
“By the time the nation completes 75 years of its Independence,every family will have a pucca house with water connection, toilet facilities,24×7 electricity supply and access” PM Narendra Modi
www.MakeMeBuilder.com
Mentored by
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIAHousing | Water | Sanitation| Energy | Transport | Manufacturing
• Network of independent market and technical experts• Think Tank and consultants focused on socially relevant sectors
Who are we?
• Mentor businesses to create opportunities from Government Policies• Incubate young entrepreneurs into innovative business models
What we offer?
• Foreign investors, consulting-design-construction firms• Developers, contractors, government agencies, entrepreneurs
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Founder of Three Global Rivers : Mukul Goel
Mukul GoelIndian Institute of TechnologyB.Tech - Civil EngineeringTexas A&M University, USAM.E. Construction EngineeringUniversity of Pittsburgh , USAMBA - Finance
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
www.MakeMeBuilder.com
India’s Housing Problem is in our face and we need to do something about it
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CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Affordable urban housing market is an immense business opportunity
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Houses Current DemandDemand by 2022
Urban 1.9 Cr 2.9 Cr
Rural 4.0 Cr 2.5 Cr
TOP STATES WITH HOUSING NEEDS
NORTH WEST SOUTH EAST
Uttar Pradesh Maharashtra Andhra Pradesh West BengalRajasthan Telangana BiharMadhya Pradesh Tamil Nadu
Karnataka
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Housing Affordability affects developed and developing countries both
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GlobalChallenge
• 330 million familieslive in substandardhousing
• 200 million familieslive in slums
GlobalOpportunity
• Overlookedopportunity bydevelopers
• 100 million homesby 2025 require$200 billion a year
IndiaChallenge
• 40% of India willlive in urban areasby 2030
• More than 1/3 ofthe urban Indiansdon’t own a home.
IndiaOpportunity
• Provide housing forover 65 millionpeople in slums
• Provide housing forEWS/LIG that is95% of shortage
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Lack of affordable housing is highest among Urban Poor
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EWS
LIG
MIG
HIG
INCOME
1-3 lakh per year
3-6 lakh per year
6-10 lakh per year
10-20 Lakh Per year
SIZE
30 Sqm
30-60 Sqm
60-140 Sqm
140-200 Sqm
AFFORDABILITY
Price = 3 to 5Yearly Income
EMI or Rent = 40%of Monthly Income
PRICE
3 -10 lakh
10-25 lakh
25-50 lakh
50-80 Lakh
EWS•EconomicallyWeaker Section
LIG•Lower IncomeGroup
UrbanPoor MIG
•Middle IncomeGroup
HIG•Higher IncomeGroup
MiddleClass
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Need of alternate delivery models for affordable housing
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Lack of organized players in affordable housing market
Projects marketed as affordable are not affordable
Affordable projects lack amenities and connectivity
Buyers have small savings and irregular income
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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PM AWAS YOJNA : Collaboration between Center, State, ULBs, Banks, Entrepreneurs
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SlumRehabilitation
• Rs. 1.0lakh/house
New Housing onPublic Land
• Rs. 1.5lakh/house
Self Build/Upgrade
• Rs. 1.5lakh/house
HomePurchase
• Interest subsidyof 6.5%
Enabling Supply : PPP Projects Enabling Demand : Direct benefits
Simplify PPP mechanisms• Extra FSI/TDR/FAR• Relaxed Density Norms• Pre-approved building layouts• Single Window Clearance• No Non Agri approval for residential zone
Loans up to 6 lacs• With qualifying
income criteriaon selfcertification basis
Identify areas• where
redevelopmentproject is notpossible
CENTRAL GOVERNMENT
STATE AND ULBs BANKS
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Entrepreneurs create communities with multitude of revenue generating services
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HOUSING
TRANSPORT
EDUCATION
FOOD
RECREATION
HEALTH
JOBS
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Lack of transport is significant deterrent in creating affordable housing offerings
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Unclear timeline oftransport availabilitymakes it speculative
investor
Creating inflation andtransport congestionaround the available
housing stock
Leaves much affordablehousing underutilized till
the transport servicesare provided
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Community Owned and Managed Transport as part of Housing Offering
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Prior to arrival of public or organized private transport
Capital Cost financed along with housing construction
Community Cars, Minibus, On demand, Pooled Cars
Financially Sustainable Social Enterprise
Case Studies in UK, Australia and Srilanka
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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How Community Transport is operationalized
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Technology enabled via smart phones and internet
The majority of the drivers are community residents
Un-organized auto-tempo-rickshaw can complement
Has Concessionary Fares or a membership based programs
Flexible and responsive to needs of the owning community
Feeder service to existing public transport services
Synchronization with public transport systems
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Community Transport has many other positive outcomes
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Enable much of the low cost land to be utilized for affordable housing
Will reduce widespread housing inflation
Provide mobility at a significantly less GHG emissions
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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We address multiple challenges through MMB
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Issues in development of affordable housing
Land Costs prohibitive to affordability
Delays in Statutory approvals
High Cost of Construction and Materials
Loans not available to target buyers
Lack of amenities and mobility
Poor living conditions and maintenance
Strategic Solutions and Ideas
Provide development capacity tolandowners to obviate need to buy land
Leverage special approval provisionsunder Government policies
Economize on scale and volume and useGOI approved technologies.
Create projects eligible for Governmentgrants and subsidies
Generate revenue from amenities andtransport services
Engage local community and NGOs indevelopment and operation
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Diverse and sustainable revenue sources
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• Franchise Fees• Management FeesService Fees
• Rental Income from Built-up share• Facility management, advertisement rightsAnnuities
• Sale of Built-up or Land Share• Value enhancement of distressed assetsAsset Liquidation
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Our Project Level Business Model
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ProjectSPV
Housing Franchise
Project
Investors LandOwnerIRR
Equity
Brand, Technology Franchise Fees
$$$1
Affordable Housing< Rs 5-25 lakh / unit
Gross Profits
Net Profit
Land
SuppliersContractors
Strategic Sourcing Volume Business
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Indicative Term Sheet with and land owner and investor
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Franchisor is Housing Franchise Company
Terms with Franchisee Land OwnerProject Size Minimum 100 units for a single projectProject Duration 2 yearsLand Valuation As per authorized valuersBrand License Fee Fixed Annual Fee irrespective of size of projectDesign Fees Per Unit Housing depending on the number size of the projectProcurement Fees Markup on materials purchased with escalation at pre-disclosed rates
Terms with InvestorsEligible Investors Record of investments in socially oriented projectsFinancial Exit 5 yearsHurdle Rate 10% IRRPerformance Fee 50% of profits over Hurdle RateCash Payout Project cash flows distributed from year 2 onwards when availableDrawdown Rolling {Investors accrue 10% p.a. from the date funds are received)
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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We apply best practices in all aspects of affordable housing lifecycle
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Land Stakeholders•Single Owner Farmer•Community Owned•Engage NGO, CSR•Government Support
Marketing•Lower Booking Fee•Flexible Payment•Rent to own options•Govt Policies linked
Execution•Technology Driven•Honesty and Passion•Mindset for efficiency•Systematic Organized
Maintenance•Resident led
management•Integrated Utilities•Maintain/Upgrade
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Incubate innovative ventures that provide value in the housing development
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Hub ofInnovation
Online SalesPlatform
ProjectManagement
Systems
New Productsfor Housing
ConstructionSystems
VendorDevelopment
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Our team structure
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Technical
Architects andEngineers
Procurementand Logistics
FacilitiesManagement
Management
Legal andLiaison
Finance andContracts
ProjectManagement
Marketing
Sales andPromotion
BrandManagement
IT, CRM, WebDesign
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Vision for Housing Franchise Company
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Preferred platformfor best available
Affordable HousingSolutions
Leading FranchiseBrand for
Affordable HousingDevelopment
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
www.MakeMeBuilder.com
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
www.MakeMeBuilder.com
Key developmental parameters in housing development
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Floor AreaRatio
Ratio of Built-up area to land area
DwellingDensity
Number of dwellings per unit land area
Setbacks Empty Perimeter around the building
GroundCoverage
Ratio of covered ground to total ground
Carpet Area Area within the periphery of the wall of the unit
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Selecting an Affordable Housing Project Site
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PLOT SIZE Economies of Scale achieved in a larger project minimum 1 Acre ingovernment approved layouts.
LOCATION In newly developing industrial area where highway connectivity ormass transit construction is underway.
ACTICVATION Several other developers have also launched their residential andretail developments projects.
DEMOGRAHICS The population growth in the region is expected to be driven by newlydeveloping manufacturing and logistics facilities.
GROWTH Strong growth in rental demand due to migration of new workers anddesirability of this area due to its clean and organized surroundings.
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Recent Initiaves by some Indian States
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UttarPradesh
The Akhilesh Yadav government is planning to build 40,000 more housing unitsacross the state. Various state development authorities will be responsible forsome of the units, while at least 25,000 will be built by private developers.The state government has already given the green light to plans to build morethan 18,000 of the units
Rajasthan Private developers who build a plotted scheme on two hectares of land will haveto earmark minimum 50% for the EWS/LIG. Under provision 3(A), the privatedeveloper will construct flats entirely for the EWS/LIG. The government will giverelaxation on land conversion charges and building approval plan to developersfalling under 3(A). Also, the saleable price can be decided by the developer.Similarly, under provision 3(B), the private developer will develop plots entirelyfor EWS/LIG category.Under provision 4(A) and 4(B), the EWS/LIG houses will be developed ongovernment land by a private developer. Seventy-five percent of suchgovernment land shall be used for EWS/LIG people, while the remaining 25% canbe sold by the developer.
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
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Ministry of Housing and Urban Poverty Alleviation (MoHUPA)
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Leadership in the Ministry• Shri M. Venkaiah Naidu, Minister• Shri Babul Supriyo, Minister of State• Dr. Nandita Chatterjee, Secretary• Rajeev Ranjan Mishra JS, Housing• Sanjeev Kumar, JS & Mission Director – Housing for All
Related Government organizations• Housing and Urban Development Corporation (HUDCO)• Building Materials and Technology Promotion Council (BMTPC)• National Housing Board (NHB)• National Cooperative Housing Federation (NCHF)• National Building Organization (NBO)
CREATING AFFORDABLE HOUSES AND COMMUNITIES IN INDIA
Glass Fiber Reinforced Gypsum (GFRG) Panel Building System
Factory Made Fast Track Modular Building System
Light Gauge Steel Framed Structures (LGSF)
Compendium of Prospective Emerging Technologies for Mass HousingBuilding Materials & Technology Promotion Council (BMTPC)Ministry of Housing & Urban Poverty Alleviation, Government of India