The market is beginning to serve the low-income customer pointed out a recent report by Monitor Deloitte. At least 30,500 units below Rs 10 lakh have been launched in 132 projects across 22 cities in the period June 2011 to January 2013.

The “State of the Low-Income Housing Market” report is based on an extensive study with research in 22 cities, interviews of 27 active developers and nine housing finance companies serving the low-income customer.

Three cities, Ahmedabad, Mumbai and Indore, have developed well with over 20 projects in each city providing housing below Rs 10 lakh, thereby offering choice of locations and developers to customers

The report states that developers are constructing smaller formats (one room kitchen / 1RK) which are selling faster given the affordability that comes along. Access to housing finance for low-income customers has also improved.

There is a huge need for housing in the lower-income population. As per the Government of India, there is a shortage of 18.78 million homes in urban India, 95% of which is accounted for by the EWS4 (households with annual income of less than INR 1 lakh) and LIG segments (households with annual income of INR 1-2 lakh).

In Mumbai, given higher per square foot prices and the price cap of INR 10 lakh, 72% of total supply is comprised of 1RKs.

In the surveyed cities, combination of three different factors – land price, connectivity and proximity to industrial activity – determined the development and spread of low-income housing projects.

As expected, the development in Mumbai is taking place along the railway lines – Boisar, Palghar towards north and Panvel, Badlapur, Neral, Asangaon towards east are the areas with good activity. Industrial activity in Boisar and extension of Mumbai suburban railway network has helped make Boisar and surrounding areas a favourable location for LIH development. In Panvel, the projects are coming up in villages like Morbhe and Khopoli of the New Panvel region.

Development in Indore is quite well spread and the LIH projects are coming up all around the periphery on arterial roads leading to the city centre. Proximity to industrial areas is playing an important role in development of Rau-Pithampura and Khandwa Road as LIH hotspots.

The Government recognizes that much of the population in the low-income group cannot afford private sector led housing and hence is trying different approaches to meet their needs — upgrading slums, rehabilitating slums, mandating private sector projects to have reservations for EWS/LIG housing, providing interest rate subsidies and waiving stamp duties.

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