The second master plan for the Chennai Metropolitan area estimates housing demand for the EWS and LIG segments to be 8,00,000 by 2026. Informal estimates seem to suggest that we are currently building at the rate of a mere 2000 houses per year! This seems to be a clear case for PPP where private sector efficiencies might have to be harnessed to deliver 8,00,000 houses by 2026. The catch is that by definition, affordable housing (300 sq ft pirced at Rs 3,00,000, say). is not very profitable and therefore might not be very attractive to the private sector.
So how do we solve this conundrum? I have some thoughts but would like to see suggestions that you guys come up with.
Wednesday, October 8, 2008
PPPs for affordable housing
Very recently, my research has moved in the direction of figuring out whether PPPs can be used to develop affordable housing in Tamil Nadu for the Economically Weaker Sections (EWS) and Low Income Groups (LIG) in society. There has also been a lot of talk recently on building 'nano homes' and the last edition of Infrastructure Today had several articles related to this.
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3 comments:
In general township developers include land cost and profits margins which are high. This shoots up the price and also some times they even exceed this price when market value is higher.
A solution might be government have to provide land to the developer and then allow the builder to build township. Finance can be done as follows:
Government land rate to be included in cost of building which is much less.
Also for the profit part government can pay on basis of annuity basis to the contractor.
Thus supplying home at Rs.3L.
Note: This solution is based on assumption that material + land + construction cost for the proposed building is within this limit of Rs.3L
Its an interesting case!
Well, This is my thought...May not be viable/feasible...
But I am making an attempt as to how this project of "NANO HOMES" can be consider under PPP.
Well, as mentioned by the Ashwin Sir that the project may not be attractive for foreign player...
But there can be certain arrangements to attract private players to come in...
One of the strategy for Govt. would be to give the private player certain piece* of land, either free of cost or at cheaper rates*, for development of say shopping complex which includes Dept Store, Vegetable Shop, Flour mill,etc. Plz don't laugh at this since this is just a suggestion... :)
But one factor the developer need to think is that they have to come up with perfect set up of these stores. It should not be so costly that private player don't get the customers! They have to focus on the Low income families.
This idea strike me...reason..As a society we have certain needs & requirements and I guess every society whether high/middle/low class families have certain basic needs.
*Research is reqd. for land size and its rate
Comments/Suggestions?
The main problem is to decrease burden on both govt & middle class people by satisfying private parties.
Suggestions (I feel):
Govt can grant land for free to private parties for construction and can hand over to EWS & LIG societies to stay for a few years, say 30years. After 30 years,Private companies may utilise that land for another 30 years and can hand over to Govt.
Advantages:
1.No need to pay subsidies by the govt.
2.As private companies are profit minded,it is viable for the private parties as they are getting land for 30 years @ free of cost.
3.As the govt offered the land to private companies for free of cost,
building cost decreases thereby no burden on common people
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