Affordable rental housing for migrants in big cities?
Industry finds procuring land, attracting investment challenging
Finance minister Nirmala Sitharaman, in the second tranche of the stimulus, mooted affordable rental accommodation for migrant labour and extension of the Credit Linked Subsidy Scheme (CLSS) till the end of the current fiscal. However, the government did not say what would be the cost borne by the government on these measures. There are worries on whether it will be feasible to find land for rental accommodation in cities and whether CLSS’ extension will attract `70,000 crores in investment in the current economic situation.
Acknowledging the challenges faced by migrant labourers and the urban poor in getting houses at affordable rents, the government will launch a scheme under the Pradhan Mantri Awas Yojana in this regard.
Finance minister Nirmala Sitharaman, in the second tranche of stimulus, announced affordable rental accommodation for migrant labours and extension of the Credit Linked Subsidy Scheme (CLSS) till the end of current fiscal. However, the government did not announce what would be the cost borne by it on these measures. Industry wonders if it will be feasible to find land for rental accommodation in cities and whether extension of CLSS will attract the estimated Rs 70,000 crore investment in the current economic situation.
Acknowledging the challenges faced by the migrant labour and the urban poor in getting houses at affordable rent, the government will launch a scheme under the Pradhan Mantri Awas Yojana. Under the scheme, governmentfunded housing in the cities can be converted into affordable rental housing complexes (ARHCs) under public-private participation mode through concessionaire.
Further, manufacturing units, industries, institutions and associations will be incentivised to develop ARHCs on their private land and operate. State government agencies/ central government organisations also will be incentivised on the similar lines to develop ARHCs and operate.
The industry wonders how feasible it will be for private institutions as well as government agencies to procure land for AHRCs in urban centres, especially metro cities, at high real estate rates.
"Whether land will be available in urban areas to develop such complexes is a big question. It is logical to use unoccupied government-funded housing units for rental purposes. But whether such housing units will be sufficient to accommodate 80 crore migrant workers is also another question," said Anuj Puri, chairman, Anarock Property Consultants.
"Unless government provides the land for free, it will not be feasible for private entities to build housing complexes in cities as the low rentals will not cover the total cost," said Niranjan Hiranandani, national president, Naredco, a realtors body.
Similarly, the government has not announced the cost on extending the CLSS till March 31, 2021. According to government, this will benefit 2.5 lakh middle income families during 2020-21, attract Rs 70,000 crore investment in housing, create jobs and stimulate demand for steel, cement, transport and other construction materials.
However, attracting investment and creating jobs depends upon how many people will invest in their first home in FY21 given the subdued macro economy, low income levels, job losses and gloomy outlook for the economy. Hence, achieving the Rs 70,000crore target looks doubtful in FY21.
"We do not know when will the Covid situation improve and when will the demand pick up. This is a challenge for every segment apart from essential items,' added Hiranandani.