Present Housing Scenario

A rapid rise in population results in higher demand of dwelling units for residential purposes. This coupled with the growth in household formation and increased urbanization in search of employment opportunities has resulted in severe pressure on urban infrastructure in recent years. The consequence has been overcrowding and unhealthy living environment, shortages of basic amenities and finally social and economic deprivation. All major urban centers in our country are gradually experiencing such deficiencies in civic amenities.

	India Snapshot
POPULATION	1.02 billion; half under age 25, 75% under age 40
POPULATION GROWTH RATE	About 2 percent or 20 million, annually; equivalent to adding the population of Australia every year
MIDDLE CLASS	20 % - 25 % of population or 200 million - 250 million
GDP	US$500 billion in 2004
GDP GROWTH RATE	8 % in 2004 with half the growth in services; forecast to grow at more than 6 percent annually over the next few years

As per the latest Census 2001, India has population of over 1027 million, which is second highest after China, with an unfavourable land-man ratio. As the country enters an era of economic growth, economic liberalization and prosperity, cities seem not yet ready to accommodate the growing population and provide work and services and environmental infrastructure for all. The twin problems of affordability and availability continue.

However, it is not ideal to envisage the housing problem as a mere demand-supply gap and leave the onus on market dynamics especially in a country like India. Because of inequitable income distribution in our country, there is bound to be a wide gap between the demand for the houses and the need for house, because the need is translated into demand only when it is backed by the purchasing power. Hence there is a definite need for intervention through the supply side by making available affordable housing to the people belonging to lower economic strata. But only a supply side intervention will not solve the problem, though it can alleviate the same.

The banking institutions have entered the housing finance market with great vigor in the last few years compelling the housing finance companies to reinvent their areas of core competence. This phenomenon has brought into significant qualitative change in the fabric of housing finance system in India. As a result of aggressive competition and gradual softening of the rate of interest, the HFCs are being compelled to operate on a basis of a comparatively thinner spread. The coming years are expected to witness many mergers and consolidations in this segment of financial institutions which would eventually determine the future of HFCs.

HIGH GROWTH SECTORS

Development
The housing shortage, as per official estimates of 10th five years plan, is 22.4 millions, almost evenly divided in urban and rural segments. The investment estimated to cover this shortfall is Rs. 1,50,000 crores on housing and Rs. 2,50,000 crores on related infrastructures.

This is one area in housing and real estate sector with maximum potential. The nationwide housing shortage at 20 million residential units continues to increase. Rapid population growth, and the growth of India's middle class, is creating demand for housing.

Office
Many foreign companies are starting or expanding operations in India. One-fifth of all Fortune 500 companies including Eli Lilly, General Electric, and Hewlett Packard have set up research and development facilities in India. The surge in foreign investment, more joint ventures between Indian and foreign companies, and the growth of India's domestic industries have created more employment opportunities for India's young, highly educated, professional workforce and fueled the growth of the country's middle class. With more disposable income, workers are spending more on consumer goods and
services and buying homes.

By most estimates, the IT/ITES growth is fuelling huge real estate requirements - some 20 million sq ft of high quality IT/ITES space would be required this year and looks set to be the level of demand in the next few years. In perspective, the stock of Grade A space for IT/ITES in the major cities total no more than 50 million sq ft, implying growth of 40 per cent or more this year!

Retail
A study done by Knight Frank India indicates that by 2007, approximately 75 mn.sq.ft. of mall space would be available in India. Within this, Mumbai, Pune, NCR (including Gurgaon, Noida, Greater Noida, Faridabad & Ghaziabad), Bangalore & Hyderabad will have a 74% share. The balance 26% will be made up by the cities like Kolkata, Chennai, Ahmedabad, Jaipur, Nagpur, Lucknow, Indore, Ludhiana & Chandigarh.

The report further adds that there were 12 million retail outlets in India, comprising mostly of small and medium neighbourhood stores. Retail would grow 100% in the next 5 years to clock Rs 70,000 crore by 2010. Organized retail was poised for strong growth in India because of its demographics. Some 70% of its population was under 35 years of age and the median age was 24 years. "These are youth with money who are willing to indulge." They were value, brand and quality conscious and for them, time was at a premium.

He said quality real estate had become available with the construction of malls. Over the next 12 - 24 months, more than 300 malls with 40 million sq. ft., of space would come up in all classes of towns. "Organised retailing is set to grow fastest in Tier 2 towns," said Mr Bakshi.

Housing Finance
Rapid population growth, and the growth of India's middle class, is creating demand for housing. Household formations are increasing and to increase homeownership, the government has begun to develop a mortgage market.

Financing is becoming available to more first-time buyers and buyers of second or vacation homes. Currently, mortgages account only for 2 percent of India's GDP, compared with 54 percent in the United States.

National Urban Renewal Mission
Outlay of Rs.55,000 million to be made under the National Urban Renewal Mission (NURM) to cover the 7 mega cities and towns with population of more than one million. The Mumbai Metro Rail Project, the Mumbai Trans Harbour Link, the Mumbai Western Expressway Sealink and the Bangalore Metro Rail Project are some projects that could be supported through the Mission. The proposal to transform Mumbai into a global finance hub has also been tabled.

From the above, it would be scene that there is a pressing demand to meet the social obligation of housing for all, and this provides an opportunity to boost real estate investment that has the potential for rapid growth of the Indian economy. This, according to some study, is possible by taking the following three steps:

Convention

The 6th National Convention on "Housing for All" is being organized by National Real Estate Development Council on 20th January 2006 at India Habitat Centre, Lodhi Road, New Delhi. Govt., Public and Private Sectors forming an integral part of this apex body have been involved in presenting the housing & construction scenario in the country. The convention shall define the road map for administrative, legal, fiscal & commercial reforms as also monetary and credit policy changes required in Indian context for the development of housing and real estate sector and to realize the objectives of National Housing and Habitat Policy. It is also designed to discuss the achievements and shortcomings in the field of housing and real estate development in the NCR region and role of Public-Private Partnership in achieving the desired results especially in meeting the housing requirements of Economically Weaker Sections and slum dwellers.

Dr. Manmohan Singh, the Hon'ble Prime Minister of India will be invited as the Chief Guest of the inaugural session which will be chaired by the Hon'ble Minister for Urban Employment and Poverty Alleviation in her capacity as the Chief Patron of NAREDCO. Chief Ministers of various states will be requested to chair the sessions concerning development activities and investment scenario of their respective states. Eminent speakers from various disciplines of real estate business from across the country would be the speakers in different sessions. The sessions and issues, which will be discussed, are structured as under -