AFFORDABLE HOUSINGIN TAMIL NADU
ASSESSING THE MARKET POTENTIAL
32 Knight Frank Advisory Services
TABLE OFCONTENT
AFFORDABLE HOUSING IN TAMIL NADU
ABBREVIATIONS 4
POPULATION AND URBANISATION TREND 4
HOUSING SCENARIO IN INDIA 6
URBAN HOUSING SHORTAGE IN INDIA 7
EVOLUTION OF HOUSING SECTOR 8
DEFINING AFFORDABLE HOUSING 10
EXISTING POLICY FRAMEWORK 11
STATE POLICIES 16
TAMIL NADU - STATE OVERVIEW 24
HOUSING SCENARIO IN TAMIL NADU 28
CITY OVERVIEW – CHENNAI 30
CITY OVERVIEW – COIMBATORE 34
CITY OVERVIEW – TRICHY 38
CITY OVERVIEW – MADURAI 42
CITY OVERVIEW – ERODE 46
CITY OVERVIEW – TIRUPPUR 50
CITY OVERVIEW – SALEM 54
CITY OVERVIEW – TIRUNELVELI 56
CONSTRUCTION TECHNOLOGY 60
FINANCING OPTIONS 64
AFFORDABLE HOUSING – KEY PARAMETERS 65
54
INR Indian Rupee
Mn Million
sq.ft Square Feet
sq.km. Square Kilometre
sq.m Square Metre
GDP Gross Domestic Product
FDI Foreign Direct Investment
CPI Consumer Price Index
LIG Lower Income Group
MIG Middle Income Group
HIG Higher Income Group
EWS Economically Weaker Section
PMAY Pradhan Mantri Awas Yojana
FSI Floor Space Index
TDR Transferrable Development Rights
MEASUREMENTS
1 acre 43,560 sq. ft.
1 mn 10 Lakh
1 sq. km. 100 Ha
1 sq. mt. 10.764 sq. ft.
AFFORDABLE HOUSING IN TAMIL NADU
With a total population of around 1.2 billion, India is the
second-most populous country in the world (World Bank
2015). The 69 years of independence have seen many socio
– economic transformation linked to urbanization trend post-
colonial rule.
As per Census 2011, more than 31% of the total population
i.e. about 377 million is urban population, living in 7,933
urban centers including 53 cities with populations above 1
million and 3 mega cities (Greater Mumbai, Delhi and
Kolkata).
ABBREVIATIONS POPULATION AND URBANISATION TREND
With continuous shift of population from rural to urban areas,
the country is witnessing rapid urbanization. During the
period 2001-2011, the proportion of rural population
decreased from approximately 72% to 69%. As per IIHS –
Urban India 2011, in 1951, there were only 5 Indian cities with
a population greater than 1 million and only 41 cities greater
than 0.1 million population. However, in 2011 there were 3
cities with a population greater than 10 million and 53 cities
with population greater than 1 million.
Knight Frank Advisory Services
Population
India PopulationRural PopulationUrban Population
2001
102.974.328.6
2011
121.083.337.7
Difference during previous decade
18.19.09.1
2017*
1338944
Difference during current decade*
12.05.76.3
Source: IIHS, Knight Frank Research
Source: Census 2011, Knight Frank Research
The table below provides population (in crore) in urban and
rural areas during the years 2001 and 2011.
Since 2001, the growth in urban population has stagnated at
around 2.80% and growth in the rural population has slowed
down to 1.16% in 2011. The chart below shows growth in
urban and rural population in India
Further, it is noted from the above chart and table below that
the overall population growth rate of the country has slowed
down recently. This is primarily on account of sharp decline in
the growth rate in rural areas, while the growth rate in urban
areas remains almost the same.
This expanding urban population has made increasing the
housing supply necessary. For a variety of reasons, the
growth in demand is not being met by supply of housing
units resulting in housing shortage in urban areas.
The next section gives an overview about the current
scenario of housing market in the country with respect to
supply and absorption in prominent cities.
Decadal Growth Rate of Population (in %)
IndiaRuralUrban
1991 - 2001
21.518.131.5
2001 - 2011
17.612.231.8
Difference
-3.9-5.90.3
Source: Census 2011
URBAN POPULATION TOTAL POPULATION
FIGURE 1URBANIZATION TREND (1951 - 2017)
Source: Census 2011, Knight Frank Research *Estimated Population
1951
1961
1971
1981
1991
2001
2011
2017*
0 200 400 600 800 1000 1200 1400 1600
Population in Million
TOTAL URBAN RURAL
FIGURE 2ANNUAL EXPONENTIAL GROWTH RATE OF POPULATION
Source: ADBI, Knight Frank Research
4.5
3.5
3
2.5
2
1.5
1
0.5
01961-19701951-1960 1971-1980 1981-1990 1991-2000 2001-2011
4
AFFORDABLE HOUSING IN TAMIL NADU
significantly faster than the income level of homebuyers.
During the last four years, the growth in residential prices in
most of the top eight cities of India has been below retail
inflation growth – a clear reflection of time correction. But still
this is not enough to make housing affordable to majority of
the homebuyers in the top cities of India. Developers need to
give a relook at the pricing, size and configuration of
residential units in their planned developments and the
government should take a proactive initiative to develop
peripheral locations with required connectivity and
infrastructure.
Another factor that will help to stimulate the demand for
house purchase is the reduction in home loan interest rates
by banks. RBI has already reduced its policy rate by 175 bps
in the last two years and is likely to lower the policy rates by
another 25-50 bps in the next three to six months. Given the
liquidity situation and reduced policy rates, banks will have
sufficient elbow room to lower the home loan interest rate in
the coming months.
Fiscal incentives on home purchase could go a long way in
reviving the demand and any move towards addressing this
in the upcoming budget will give a huge boost to the
industry. Any move by the Government of India to increase
the limit on tax exemption on home loan interest and
principal amount payment in the upcoming budget could
provide the much needed fillip to the ailing sector.
Finally, implementation of the Real Estate (Regulation and
Development) Act, 2016 within the stipulated timeframe
could be a major factor in bringing back the confidence of
homebuyers in the real estate sector. The timely
implementation of this Act across the country will not only
make the sector more transparent but will also help in
attracting institutional participation.
We believe that by the end of 2018, when most of these
factors would have started showing a positive impact on the
residential segment, we will see the emergence of a new
base that will be used to analyse the future growth of this
sector.
76 Knight Frank Advisory Services
As per Knight Frank Research, the residential market of the
top eight cities in India – Mumbai, NCR, Bangalore, Pune,
Chennai, Hyderabad, Kolkata and Ahmedabad ended on a
positive note in 2017 with unsold inventory witnessing a
19% drop compared to the same period of the previous
year. More than 228,072 units were sold in 2017 as
compared to 244,686 units in 2016.
HOUSING SCENARIO IN INDIA
The second half of 2016 started with the same pace, with
Q3 2016 sales volume showing a positive growth on the
back of the start of the festive season. Sales volume across
the top eight cities were holding steady at 67,000 – 68,000
units per quarter since Q1 2016 and we expected Q4 2016
numbers to be marginally better than the first three quarters.
As a result, we projected sales volume of 2016 to be
marginally higher than 2015 and had estimated an 8%
growth during the year.
At 528,494 units, the 2017 unsold inventory is at its lowest
level since 2010. The average quarterly sales used to be in
excess of 90,000 units in 2010. The new launches number is
much worse at just 24,300 units in Q4 2016, which is not
even one-fifth of its peak quarterly level observed during
2010.
The fall in sales volume and new launches were so severe
during Q4 2017, that it brought down the entire H2 2017
numbers, down by 7% and 19% respectively, compared to
H2 2016. H2 2017 reported sales volume and new launches
of 107,316 units and 40,832 units, respectively.
With this backdrop, the biggest question in the mind of the
stakeholders of the industry is – what next? Sales need to
be revived and the following points discuss various
measures that we believe will help to revive the demand for
homes in the coming quarters.
The first and foremost step that the industry needs to take is
to make houses more affordable. Currently, the biggest
factor affecting sales is the unaffordability of the
homebuyers. House prices till 2012 have increased
URBAN HOUSING SHORTAGE IN INDIA
The case for sustainable urbanization becomes stronger and
acquires greater immediacy in the context of the rural to
urban migration, changing demographics, socio-economic
composition, increase in households, formation of nuclear
families, and a burgeoning middle class. With most
megacities and medium-sized cities witnessing high
concentration of urban population, there has been a rising
pressure on housing as well as basic urban infrastructure and
services.
Considering the size of the homeless population in the
country in 2011 which was only 1.77 million (0.15% of the
total population), the housing shortage in India does not
appear very big. The homeless population contributes only
marginally to the housing shortage. The problem becomes
acute when, in addition to homelessness, the replacement
needs of houses in bad physical condition (due to age and
structural durability), as well as the ones that offer
substandard living conditions (due to the level of congestion
inside the house), are also considered.
The figure below shows the trend in urban population
increases are accompanied by increases in housing. This
shortage has been increasing despite numerous housing
programs implemented every 5-10 years
Note: Housing shortage = Households living in non-serviceable katcha (nondurable) +
households living in obsolescent houses + households living in congested houses +
households that are homeless
It has been noted that majority of the housing shortage in
urban areas is primarily attributed to congested living
conditions and lesser due to the existence of physically unfit
structures (nondurable and obsolete).
Further, the addition of new housing stock in the market has
not reduced shortages, implying that the target consumers
for the new stock are different from those households who
Num
ber
of U
nits
LAUNCHES SALES
FIGURE 3
Source: Knight Frank Research
ANNUAL LAUNCHES & SALES OF RESIDENTIAL UNITS - TOP EIGHT CITIES
0
1,00,000
2,00,000
3,00,000
4,00,000
5,00,000
6,00,000
2010 2011 2012 2013 2014 2015 2016 2017
Num
ber
of U
nits
2015 2016 2017
Source: Knight Frank Research
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Mum
bai
NC
R
Ben
galu
ru
Pun
e
Che
nnai
Hyd
erab
ad
Kol
kata
Ahm
edab
ad
FIGURE 4CITY WISE HALF YEARLY SALES -RESIDENTIAL UNITS
Num
ber
of U
nits
2015 2016 2017
Source: Knight Frank Research
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Mum
bai
NC
R
Ben
galu
ru
Pun
e
Che
nnai
Hyd
erab
ad
Kol
kata
Ahm
edab
ad
FIGURE 5CITY WISE HALF YEARLY LAUNCHES -RESIDENTIAL UNITS
mn
URBANHOUSEHOLD
URBANHOUSING STOCK
URBANHOUSING SHORTAGE
Source: ADBI, Knight Frank Research
0
20
40
60
80
100
120
1971 1981 1991 2001 2011
FIGURE 6URBAN HOUSEHOLDS, HOUSING STOCK &HOUSING SHORTAGES IN INDIA
AFFORDABLE HOUSING IN TAMIL NADU
are creating the market demand for housing, and the stock is
unaffordable even for the targeted consumer group, which
leads to lesser absorption and higher vacancy rates.
The problem of housing shortages is more serious in rural
areas (in absolute terms) than in the urban centers due to the
size of the rural population in India (69% of the total
population)
creation of several housing finance companies for credit off-
take in the retail housing finance sector offering innovative
and competitive housing finance schemes, issue of Foreign
Direct Investment guidelines, enhancing the resource base of
the Housing and Urban Development Corporation, the
principal domestic funding agency for public housing
projects, fiscal incentives to entrepreneurs to invest in
development of housing projects, and internal restructuring,
so that viable housing projects could be taken up for the
lower income groups.
Increased liquidity and infusion of foreign investment into the
sector triggered the housing bubble between 2005 and 2007.
The year 2008 was a year of extremes, swinging from
extreme euphoria to unwarranted pessimism and prompted
revision of GDP forecasts. Stimulus packages have been
announced in various phases to accelerate the growth of the
housing and real estate sector including a INR 300 billion
package, designating loans of up to INR 2 million under
priority sector lending, reducing the cost of funds and
ensuring the uninterrupted flow of credit to productive
sectors of the economy and cut in excise on steel and
cement to lower the construction cost marginally.
As a result of the organization of the housing finance market,
increased public investment and legal reforms, the sector has
attained a considerable level of maturity with many private
sector participants in the housing development sector. The
wider network of primary lending institutions – commercial
banks, housing finance companies and other financial
institutions have substantially added to the capacity of the
housing finance sector. As a result, a better integration of the
housing finance system with the macro financial sector is
expected to emerge in the longer run. Significant priority has
been accorded by the government to the sector. This is
reflected in past budgets where a number of fiscal
concessions and other measures were extended to both the
providers as well as borrowers of finance. As a consequence,
demand for housing has picked up.
Nevertheless, it is important to note that while the number of
institutional outlets for housing credit has increased
considerably during the last decade, volume of funds for the
sector as a whole, accessibility of credit to the economically
weaker sections and affordability continue to be critical
aspects for the housing sector. Substantial investments are
needed to address the shortage in the sector.
Steering the wave of growth thrust driven by a strong
decadal urban and metro-population growth and the high
number of people moving upwards on the social pyramid are
private developers at the helm. Looking to capitalize on the
credit growth in housing, increased liquidity in the system
and competition amongst home loan providers leading to a
steep fall in interest rates, developers have been actively
generating ample housing stock and following aggressive
marketing strategies. However, their focus segment of
development brings out the lop-sided nature of development.
The country faces a shortage in housing and the shortfall is
largely in the lower-income brackets. The participation of
private developers has been very low since most of them
have restricted their focus to the oversupplied premium
segment owing to the exclusivity and high-profit margins the
niche segment offers. This has come in the way of the vision
of a balanced urban development, as the segments with the
maximum demand for quality housing stock and serviced
amenities like safe drinking water, good sanitation and
household electricity in line with in the town planning concept
i.e., LIG and EWS segments continue to be marginalized,
making the housing shortage wider. Besides, the exponential
growth in the informal sector in urban areas is creating
additional demand.
While lack of suitable policies and incentives to attract
developers to mass housing have led to this lack of
participation, of late, some concessions, such as increasing
FSI for special townships with affordable houses, cluster
approach for urban renewal and reservation for lower and
middle-class homes, as in Mumbai, have lured several
developers to this segment. Most developers today
recognizing the pressing need and market for affordable
housing for various socio-economic groups are attempting to
provide sustainable quality homes. Despite this, the housing
problem still remains unaddressed, as an apparent mismatch
in the price points for these homes and affordability levels
have made housing go beyond the reach of the targeted
groups. The case for arriving at a reasonable slotting of
affordability levels is strengthened by the fact that in a
product of this kind, for instance in the EWS category
housing which is dovetailed with a social objective, the
product should be formulated, priced and positioned in a
way that it percolates down to the lower rungs of the society.
For the MIG segment, the buyers should be offered a choice
in their affordability level without needing to stretch their
budgets to accommodate a higher price tag for a home.
To bridge the wide gap in housing for the identified
segments, there is a need to augment sustainable and
affordable housing stock along with related infrastructure like
water, drainage, solid waste management, electricity and
transportation in a synergistic framework.
98 Knight Frank Advisory Services
Housing shortages in rural areas have almost been stagnant
(except in 2011), though the number of households has
doubled in the past 4 decades. This indicates that, with the
availability of land in rural areas, construction of a house is
easier, although the quality of construction has been lacking.
Hence, housing shortage in rural areas is primarily due to the
bad condition of the physical structures (nondurable and
obsolete) and lesser due to congestion.
EVOLUTION OF HOUSING SECTORThe reforms and policy initiatives taken so far towards
addressing the challenges of the housing sector will help to
chart the evolution of the housing sector through the post-
independence decades. The years after independence in
India witnessed increasing government control in the housing
sector, whereas in the pre-independence period, landowners
could put their lands into the housing market. The sector for
several decades was characterized by unorganized market,
development disparities, straitjacketing of development
approach and a deterrent rent control system. Traditional
construction and procurement techniques were used. Limited
financing options were available and the capital market was
not mature. Housing as an asset creation came at the later
stage in the hierarchy of needs of individuals. Further,
creation of development authorities and housing boards as
the major housing providers, slow pace of the cooperative
sector movement, introduction of the Urban Land (Ceiling
and Regulation) Act, 1976 as a central legislation all over
India created many hindrances for private land owners
intending to put their lands into the housing market which
ultimately put severe constraints on supply in a growing
demand scenario.
Another big setback to the housing sector was the prolonged
continuance of the Rent Control Acts in various states which
led to disputes, fear of non-eviction of tenants, dilapidation of
housing stock and locking up of property in prime areas of
the city from redevelopment. Moreover, restrictive town
planning laws and development controls inhibited private
sector participation in creation of townships on account of
lack of procedural clarity and uncertainty about economic
viability, etc. Apart from high stamp duties and cumbersome
procedures for registration of property transactions, lack of
incentives for investments to be channelized into the housing
sector and restrictions on foreign investments presented little
scope or incentive for private enterprise participation. On the
other hand, government promoted housing suppliers like the
housing boards and development authorities were totally
dependent on credit financing from various funding agencies
like Housing and Urban Development Corporation and
buckled under the pressure of cost recovery and huge loan
repayment.
The post-1990 period can be seen as the era of housing
sector reforms. In the macro economic backdrop of
liberalization of the economy as a whole, several sweeping
changes by way of structural reforms by the government
were heralded. Post economic crisis of 1990-91, successful
sequencing and pacing of these reforms resulted in a
favorable macro-economic environment. The National
Housing Policy clearly recognized the key role of public,
private and the cooperative sectors in meeting the housing
challenge. It envisaged a 'facilitative' role for the state and a
direct and proactive role for the other players – in particular
the role of the private enterprise and market forces.
The major housing sector reforms and market oriented
policies that were brought about had a positive bearing on
the housing sector as they encouraged the participation of
people and institutions at large in their various capacities, i.e.,
as savers, investors, lenders and borrowers in housing
activity. These included fiscal incentives to individuals
investing in house purchase in successive annual budgets,
mn
RURALHOUSEHOLD
RURALHOUSING STOCK
RURALHOUSING SHORTAGE
Source: ADBI, Knight Frank Research
0
50
100
150
200
250
1971 1981 1991 2001 2011
FIGURE 7RURAL HOUSEHOLDS, HOUSING STOCK &HOUSING SHORTAGES IN INDIA
AFFORDABLE HOUSING IN TAMIL NADU
the absence of an institutional rental market in India,
affordable and low cost housing denotes ownership and not
rental housing.
Low cost housing generally refers to cost effective housing
that relies on 'low cost technology' that ensures similar
quality and durability as compared to more commonly used
technologies. In India, low cost housing is primarily aimed at
Economically Weaker Sections (EWS) and Low Income
Groups (LIG), and the intervention and involvement of
government authorities is likely to be prominent. As per the
latest available literatures , households having an annual
income of less than INR 6 lakhs are termed as LIG, and
households belonging to EWS will be further down in terms
of income classification i.e household having an annual
income of less than INR 3 lakhs. The concept of affordable
housing, in contrast to that of low cost housing, is applicable
across all income categories.
The affordability of a household in a given location is an
interactive outcome of the house price, household income,
spending and saving behavior and other demographic
factors like size of the household. It is recognized that
affordability is relative to geographical area, time and income
category. Thus, defining affordable housing continues to be a
challenge for major players of the real estate sector in India.
However affordability can be defined as provision of
sustainable shelter with basic amenities at affordable price
whilst affordability can be achieved by tweaking the factors
affecting the same:
Cost of land – Provision of Incentives to the private
developer for developing affordable housing projects and
PPP in housing projects as implemented earlier by the
Government.
Cost of Construction – Implementing construction
technology to reduce construction cost and using
sustainable building material to increase the building
performance and to reduce the operational cost.
Financial Support – In spite of PMAY's CLSS, Support from
financial Institutes would require to encourage the first time
home buyers in EWS/LIG sectors to avail housing loan by
slashing down the up-front payment either through
instalments or through subvention schemes.
1110 Knight Frank Advisory Services
• For both EWS and LIG, cost of the dwelling unit should
not exceed four times of the household's gross annual
income
• For both EWS and LIG, monthly repayment
obligation/EMI should not exceed 30 percent of the
household's gross monthly income
As per the “Affordable housing in partnership” scheme
launched in 2009 by The Ministry of Housing and Urban
Poverty Alleviation, criterion for EWS and LIG was
categorized in terms of unit area and repayment capability as
defined below:
• In terms of super built-up area, EWS and LIG category
units should not exceed 300 sq.ft and 500 sq.ft
respectively
• In terms of carpet area, EWS and LIG category units
should not exceed 25 sq.m and 48 sq.m respectively.
• Monthly repayment obligation/EMI for housing loan
should not exceed 30% to 40% of monthly income of the
buyer
As per “Pradhan Mantri Awas Yojana”, Housing for all
scheme launched in 2015 by the Ministry of Housing and
Urban Poverty Alleviation, criterion for EWS and LIG was
categorized in terms of income level and unit area as defined
below:
• In terms of income level For EWS, annual household
income should not exceed 'Rupees three lakhs' per
annum
• In terms of unit area for EWS, carpet area of the dwelling
unit should not exceed 30 sq.m
• In terms of income level for LIG, annual household
income should be ranging from 'Rupees Three Lakhs One
to Rupees Six lakhs’
• In terms of unit area for LIG, carpet area of the dwelling
unit should not exceed 60 sq.m
KNIGHT FRANK'S CRITERION FOR DEFINING
AFFORDABLE HOUSING
Affordable housing and low cost housing are the most talked
about issues in the real estate sector these days. However,
there is a distinct difference between the two concepts. In
The term 'Affordability' is considered as relative term which
has different meaning depending on the stake holders.
However 'Affordable Housing' has been categorized based
on certain criteria set by the Government to accommodate
housing for every household in India.
According to RICS Report on Making Affordable Housing
Work in India, Affordability in the context of urban housing
would mean provision of “adequate shelter” on a sustained
basis ensuring security of tenure within the means of the
common urban household.
CENTRAL GOVERNMENT'S CRITERION FOR
DEFINING AFFORDABLE HOUSING
In 2007 National Urban Housing and Habitat Policy was
implemented by Ministry of Urban Poverty Alleviation to
achieve provision of Housing for all with special focus on
economically vulnerable (EWS and LIG) segment in the
society.
The primary objectives of Affordable Housing of this policy
are:
• Accelerating the pace of housing development and related
infrastructure facilities
• Creating adequate housing stock both on rental and
ownership basis
• To Provide Capital or Interest subsidies for EWS and LIG
sectors
• Using Technology for modernizing the housing sector with
the concept of Green and Sustainable development for
energy and cost effectiveness
However no criterion was set in this policy to categorize the
EWS and LIG with respect to affordable housing hence a
Taskforce was implemented in 2008 on promoting affordable
housing by the Government of India to frame the defining
criteria for affordable housing.
As per “Taskforce on promoting Affordable Housing” with
respect to LIG and EWS, area of the dwelling unit, income
level and EMI repayment capability were considered as a
benchmark for defining the affordability as mentioned below:
• Carpet area of the dwelling Unit should not exceed
300 sq.ft for EWS and 600 sq.ft for LIG
DEFINING AFFORDABLE HOUSING
EXISTING POLICY FRAMEWORK
Over the years, the Central Government has formulated many
policies for housing and has assisted in the delivery of
affordable housing for the EWS, LIG and lower MIG. Housing
schemes by the Central Government are implemented by the
Ministry of Housing & Urban Poverty Alleviation (MHUPA).
The policies of urban development and housing in India have
come a long way since the 1950s. In the First Five Year Plan
(1951 - 56), emphasis was given on institution building and
on construction of houses for Government employees and
weaker sections. Subsequent plans focused on provision of
services along with shelter, and mobilizing private sector
efforts for low�cost housing. The first National Housing Policy
was formulated in 1988. National Housing and Habitat Policy
(NHHP) in 1998 aimed at ensuring “shelter for all” and better
quality of life to all citizens by using the unused potential in
public, private and household sectors. Subsequent
programmes include the National Slum Development
Programme (NSDP), night Shelter for urban shelterless, and
Valmiki Ambedkar Awas Yojana (VAMBAY).
Further, bodies like the National Housing Bank (NHB) and
Housing & Urban Development Corporation (HUDCO) had
also been created to facilitate the implementation of such
policies. Key highlights of major policies are given below:
1. NATIONAL URBAN HOUSING AND HABITAT POLICY
(NUHHP) in 2007 was the first policy specific to urban
housing. The Policy focused on promoting various types
of public-private partnerships for realizing the goal of
“Affordable Housing for All” with special emphasis on the
urban poor. Given the magnitude of the housing shortage
and budgetary constraints of both the Central and State
Governments, the policy focused to promote various
types of partnerships between public, private,
cooperative and the institutional sectors in order to attain
the objectives.
In order to develop a sustainable and implementable
Housing and Habitat Policy, Ministry of HUPA has set the
process of developing the National Urban Housing &
Habitat Policy (NUHHP) 2017 to reflect the changes in the
recent past and taking forward the agenda of
Government of India on “Housing for All” by 2022.
Following this policy, many programmes as mentioned
AFFORDABLE HOUSING IN TAMIL NADU
below specific to affordable housing have since been
incorporated.
2. JAWAHARLAL NEHRU NATIONAL URBAN RENEWAL
MISSION (JNNURM): The JNNURM was launched and
implemented by Ministry of Housing and Urban Poverty
Alleviation (MoHUPA) in 2005. It aimed to construct 1.5
Million houses for the urban poor in the mission period
(2005-2012) in the 65 mission cities. It has two
components –
• Basic Services for Urban poor (BSUP) and
• Integrated Housing and Slum Development
Programme (IHSDP)
These aimed at integrated development of slums through
projects for providing shelter, basic services and other
related civic amenities with a view to providing utilities to
the urban poor. 65 Mission Cities identified based on
urban population (Census 2001), cultural and tourist
importance were covered under BSUP and the 887 cities
were covered under IHSDP.
Further, under BSUP, project cost is shared in the ratio of
50:50 for cities with population more than 1 million (as
per Census 2001), 80:20 for other smaller Mission Cities
and 90:10 for North Eastern and Special category States.
Under IHSDP, project cost is shared in the ratio of 80:20
for remaining smaller cities and 90:10 for North Eastern
and Special Category States.
Mission duration was 7 years from 2005-06 which has
been extended up to 31st March, 2017 for completion of
ongoing work only in projects sanctioned up to 31st
March, 2012.
Progress of JNNURM: As on 31.12.2016, under BSUP,
62 select cities in the country are covered, whereas 877
cities are covered under IHSDP.
Out of 12,40,968 houses approved, 10,55,549 houses
have been constructed of which 8,85,873 houses have
been occupied by the beneficiaries and 1,58,977 DUs are
presently under progress. Central share of INR 17,906.69
crore has been disbursed to States/ UTs for the projects
under JNNURM (BSUP & IHSDP).
With this, RAY and other previous schemes (AHP and
RRY) were discontinued by the competent authority.
The mission - Pradhan Mantri Awas Yojana – Housing for
All (Urban) was launched by Central Government to
achieve the objective of providing every family a pucca
house with water connection, toilet facilities, 24x7
electricity supply and access. The mission will be
implemented during 2015-2022 and it will provide central
assistance to implementing agencies through States and
UTs for providing houses to all eligible families/
beneficiaries by 2022. All statutory towns as per Census
2011 and towns notified subsequently would be eligible
for coverage under the Mission.
Definitions for the purpose of the mission:
• Affordable Housing Project: Housing projects where
35% of the houses are constructed for EWS category
• Beneficiary: A beneficiary family will comprise
husband, wife and unmarried children. The beneficiary
family should not own a pucca house (an all weather
dwelling unit) either in his/her name or in the name of
any member of his/her family in any part of India
• Economically Weaker Section (EWS): EWS
households are defined as households having an
annual income up to INR 300,000 (Rupees Three
Lakhs). States/UTs shall have the flexibility to redefine
the annual income criteria as per local conditions in
consultation with the Centre.
• EWS House: An all weather single unit or a unit in a
multi-storeyed super structure having carpet area of
upto 30 sq.m with adequate basic civic services and
infrastructure services like toilet, water, electricity etc.
States can determine the area of EWS as per their
local needs with information to Ministry
• Low Income Group (LIG): LIG households are
defined as households having an annual income
between INR 300,001 up to INR 600,000. States/UTs
shall have the flexibility to redefine the annual income
criteria as per local conditions in consultation with the
Centre.
• Slum: A compact area of at least 300 population or
about 60-70 households of poorly built congested
tenements, in unhygienic environment usually with
inadequate infrastructure and lacking in proper
sanitary and drinking water facilities.
It seeks to address the housing requirement of urban
poor including slum dwellers through following
programme verticals:
12 Knight Frank Advisory Services
Details
No. of ProjectsTotal Project CostNo. of DUs
BSUP
478 ongoing projectsINR 23,126.00 crore7,88,969
IHSDP
1030INR 9,591.65 crore4,51,999
3. RAJIV AWAS YOJANA (RAY): This programme aimed at
creating a slum free India by providing affordable housing
to the urban poor. It was launched in 2011 in two phases.
The “preparatory phase” ended in 2013. The
“implementation phase” was sanctioned for action from
2013 to 2022. The two major objectives of RAY can be
summed up as follows:
• Legal recognition of slums (notified or non-notified)
and bringing them into the formal system
• Redress the failures of the formal system
RAY focused to provide financial support to implementing
agencies including States/UTs/Urban Local Bodies
(ULBs)/Central Government Agencies, for providing
housing and improvement of basic civic infrastructure
and social amenities in each selected slums. The
schemes of Affordable Housing in Partnership (AHP) and
Interest Subsidy for Housing the Urban Poor (ISHUP)
were merged into this scheme.
AHP scheme aimed to encourage private sector
participation in creation of affordable housing stock,
recognizing that mere efforts of the Government would be
insufficient to address the housing shortage. It was earlier
introduced in 2009 as part of BSUP component of
JNNURM and subsequently, was dovetailed with RAY.
ISHUP / Rajiv Rinn Yojana (RRY) is an instrument to
address the housing needs of the EWS/LIG segments in
urban areas, through enhanced credit flow. It provides
interest subsidy of 5% (500 basis points) on loans
granted to EWS and LIG categories to construct their
houses or extend the existing ones. Upper limit of loan
amount is INR 5 lakh for EWS and INR 8 lakh for LIG;
interest subsidy would, however, be limited to the first
INR 5 lakh of the loan amount, in case the loan exceeds
this amount.
Progress of RAY projects: As on 31.01.2017, a total of
162 projects with a total project cost of INR 6,323.04
crore involving Central Share INR 3465.91 crore for
construction/upgradation of 1,17,707 DUs have been
approved and INR 2,141.28 crore has been released.
During the period April 2016 to December 2016, 13,881
DUs were completed and 9,940 were occupied.
On May 2015, RAY was rolled over into the Housing for
All (HFA) by 2022 policy.
4. PRADHAN MANTRI AWAS YOJANA – HOUSING FOR
ALL (URBAN): In 2015, the Ministry of Housing & Urban
Poverty Alleviation launched a new mission “Housing for
All” by 2022 for urban areas with comprehensive scope.
"In-situ"
Slum Redevelopment
Affordable Housing
through Credit Linked
Subsidy
Affordable Housing
in Partnership
Subsidy for beneficiary-led
individual house construction
or enhancement
• Using land as a resource
• With private participation
• Extra FSI/ TDR/ FAR if
required to make projects
financially viable
• Interest subvention subsidy
for EWS and LIG for new
house or incremental
housing
• EWS: Annual Household
Income up to INR 3 lakh
and house sizes up to
30 sq.m
• LIG: Annual Household
Income between INR3-6
lakhs and house sizes up to
60 sq.m
• With private sector or public
sector including Parastatal
agencies
• Central Assistance per EWS
house in affordable housing
projects where 35% of
constructed houses are for
EWS category
• For individuals of EWS
category requiring
individual house
• State to prepare a separate
project for such
beneficiaries
• No isolated/ splintered
beneficiary to be covered
“In-situ” Slum Redevelopment using land as a resource
This approach aims to leverage the locked potential of
land under slums to provide houses to the eligible slum
dwellers bringing them into the formal urban settlement.
Slums, whether on Central Government land/State
Government land/ULB land, Private Land, should be
taken up for “in-situ” redevelopment for providing houses
to all eligible slum dwellers. Slums so redeveloped should
13
AFFORDABLE HOUSING IN TAMIL NADU
compulsorily be denotified.
Private partner for Slum Redevelopment would be
selected through open bidding process. State
Governments and cities would, if required, provide
additional Floor Area Ratio (FAR)/Floor Space Index
(FSI)/Transferable Development Rights (TDR) for making
slum redevelopment projects financially viable. Slum
rehabilitation grant of INR 1 lakh per house, on an
average, would be admissible for all houses built for
eligible slum dwellers in all such projects.
“In-situ” redevelopment of slums on private owned lands
for providing houses to eligible slum dwellers can be
incentivised by State Governments/UTs or ULBs by
giving additional FSI/FAR or TDR to land owner as per its
policy. Central assistance cannot be used in such cases.
Credit-Linked Subsidy Scheme
The Mission, in order to expand institutional credit flow to
the housing needs of urban poor will implement credit
linked subsidy component as a demand side intervention.
Credit linked subsidy will be provided on home loans
taken by eligible urban poor (EWS/LIG) for acquisition,
construction of house.
Beneficiaries of Economically Weaker section (EWS) and
Low Income Group (LIG) seeking housing loans from
Banks, Housing Finance Companies and other such
institutions would be eligible for an interest subsidy at the
rate of 6.5 % for a tenure of 20 years or during tenure of
loan whichever is lower. The Net Present Value (NPV) of
the interest subsidy will be calculated at a discount rate
of 9 %.
The credit linked subsidy will be available only for loan
amounts upto INR 6 lakhs and additional loans beyond
INR 6 lakhs, if any, will be at nonsubsidized rate. Interest
subsidy will be credited upfront to the loan account of
beneficiaries through lending institutions resulting in
reduced effective housing loan and Equated Monthly
Installment (EMI).
Credit linked subsidy would be available for housing
loans availed for new construction and addition of rooms,
kitchen, toilet etc. to existing dwellings as incremental
housing. The carpet area of houses being constructed or
enhanced under this component of the mission should be
upto 30 sq.m and 60 sq.m for EWS and LIG, respectively
in order to avail of this credit linked subsidy. The
beneficiary, at his/her discretion, can build a house of
larger area but interest subvention would be limited to
first INR 6 lakh only.
As per the latest programme under the 'Pradhan Mantri
Awas Yojana', households having an annual income of
less than INR 18 lakh would be eligible for three per cent
interest subsidy for loans up to INR 12 lakh and four per
cent interest subsidy for up to INR 9 lakh for annual
house hold income of INR 12 lakh, respectively. This
increases the affordability for a buyer and provides an
incentive to buy a house.
Housing and Urban Development Corporation (HUDCO)
and National Housing Bank (NHB) have been identified as
Central Nodal Agencies (CNAs) to channelize this subsidy
to the lending institutions and for monitoring the progress
of this component. Ministry may notify other institutions
as CNA in future.
Affordable Housing in Partnership
On supply side intervention, this mission will provide
financial assistance to EWS houses being built with
different partnerships by States/UTs/Cities. To increase
availability of houses for EWS category at an affordable
rate, States/UTs, either through its agencies or in
partnership with private sector including industries, can
plan affordable housing projects. Central Assistance at
the rate of INR 1.5 Lakh per EWS house would be
available for all EWS houses in such projects.
The States/UTs would decide on an upper ceiling on the
sale price of EWS houses in rupees per square meter of
carpet area in such projects with an objective to make
them affordable and accessible to the intended
beneficiaries. For that purpose, State and cities may
extend other concessions such as their State subsidy,
land at affordable cost, stamp duty exemption etc.
Beneficiary-led individual house construction or
enhancement
The fourth component of the mission is assistance to
individual eligible families belonging to EWS categories to
either construct new houses or enhance existing houses
on their own to cover the beneficiaries, who are not able
to take advantage of other components of the mission.
Such families may avail of central assistance of INR 1.50
lakhs for construction of new houses or for enhancement
of existing houses under the mission.
Progress of the scheme: As on 31.12.2016, 34 MoAs
have been signed with 29 States and 5 UTs; 3,888 cities
have been selected in 34 States/UTs for inclusion under
the Mission. 3031 projects for construction of 14,01,097
houses of EWS category in 1,792 cities of 29 States/UTs
involving central assistance of INR 20,724.61 crore have
been accepted by Government under the Mission.
Central assistance of INR 4,686.82 crore as part of 1st
installment has been released to the concerned States
against approved projects
5. FOREIGN DIRECT INVESTMENT ( FDI ) POLICY ,
PRESS NOTE 10 – In 2014 Ministry of Commerce and
Industry had Released a consolidated press note in
construction sector with relaxation of two major
conditions 'Minimum Built-up area' and 'Capital
Requirement' which was envisaged to boost the
affordable housing development.
Union Budget 2017-18: In Feb 2017, the Central
Government made following announcements which shall
provide further impetus to the affordable housing
projects.
Major policy announcements:
• Infrastructure status has been accorded to the
affordable housing projects
• Rural housing expenditure increased from INR 15,000
crore to INR 23,000 crore, under Pradhan Mantri Awas
Yojana (Gramin)
• Over one crore houses to be built for the homeless in
rural areas by 2019
• The National Housing Bank (NHB) would refinance
individual housing loans of about INR 20,000 crore in
FY2017–18
• Allocation to infrastructure sector is at a record high of
INR 3.96 lakh crore for FY2017–18, an increase of
over 38 per cent over the previous fiscal year
• Extension of tenure of loans under Credit Linked
Subsidy Scheme (CLSS) of PMAY to 20 years from 15
years and introduction of a new CLSS for middle
income group with a provision of INR 1,000 crore in
2017-18
Granting of infrastructure status to affordable housing is
likely to provide impetus to the government's mission of
'Housing for All by 2022'. With the infrastructure status,
the developers shall have access to cheaper funding by
way of debt which would result in reduction of overall
cost of homes to the buyer. Further, this would see a
likely increase in participation from domestic and foreign
players in the affordable housing sector.
Key direct tax proposals
Certain conditions for claiming 100 per cent profit linked
deduction by a developer of affordable housing projects
as introduced by Finance Act 2016 has been relaxed as
under:
• With respect to eligibility limits of 30 sq.m and 60
sq.m – built-up area has been substituted by carpet
area as defined under Section 2(k) of Section 2 of the
Real Estate (Regulation and Development) Act, 2016;
• Time limit for completion of a project extended from
three years to five years from the date of approval by
the competent authority;
• Limitation on size of residential unit of 30 sq.m shall
be applicable only to four metro cities (Chennai, Delhi,
Kolkata and Mumbai) and shall not apply to a place
located within 25 km from the municipal limits of such
four metro cities.
• Tenure for applicability of Long term capital gain on
house sale has been reduced from three years to two
years
• Capital gain tax liability is applicable only after
completion of project
The proposal of the government to relax the size
requirement for residential units from built-up area to
carpet area would enable the real estate developers
expand customer base and also claim tax deduction
Further, the government's proposal to increase the time
limit allowed for completion of the project from three
years to five years would expand the number of projects
eligible for tax incentives. Modified capital gain tax
liability clause would attract land owners to venture into
JV development
EVALUATION OF HOUSING POLICIES
The impact of the various programs/policies on the
condition of housing in India since independence has
been limited. An overall assessment of the housing stock
in the country, in conjunction with budgetary allocations,
indicates that, while most of these programs were well
intended in terms of their objectives, they could not
deliver much due to the lack of financial resources.
Dependency on the central government for funds
encouraged a top–down approach, with the programs
being formulated at the national level on the basis of
feedback from the states, with marginal inputs from the
operational agencies and staff directly working at the
grassroots level. Further, multiplicity of programs with
varying components directed at the same target group
and lack of convergence or proper coordination,
sequencing, and linkages among them further added to
the hindrance. The programs also lacked public
participation in their planning and implementation.
1514 Knight Frank Advisory Services
AFFORDABLE HOUSING IN TAMIL NADU
Proposed Models for Affordable Housing:
Model 1: Private Developer on Private Land - Under this
model, three modes of private development are proposed:
• The first mode refers to the mandatory provision of ear-
marking either 10% of the total built up area or 25% of
total number of units, in all Group Housing and Group
Development Scheme Projects, whose land extent is
more than 5 acres.
• The second mode of private development refers to group
housing schemes aligned to requirements of the AHP
Scheme of GoI, with minimum 250 dwelling units. The
DUs would be a mix of EWS/LIG/Higher
Categories/Commercial of which at least 60% of the FAR/
FSI will be used for dwelling units of carpet area of not
more than 60 sq.m, in addition 35% of the total number
of dwelling units constructed should be for EWS/ LIG I
category.
• The third mode of private development refers to
construction of affordable housing units by the private
developer as a stand- alone affordable housing project or
as a mix with other MIG/ HIG units with no conditions on
number of units, pricing, size specifications, income
eligibility etc, aligned to open market.
Model 2: Private Developer on Government Land:
• Government land / ULB land would be identified for
allotment to developers for construction of
EWS/LIG/MIG/HIG flats through an open and transparent
bidding process.
• Developer offering maximum built-up for EWS/LIG-I, LIG-
II type of affordable houses to be surrendered free of cost
to the concerned authority will be selected.
• Government land shall be allotted free of cost to the
selected developer for construction of the housing
scheme on a 99 years transferrable lease basis.
• The Government land allotted shall be free of all
encumbrances, with all relevant clearances in place such
as land use conversion etc.
Model 3: Government led Development:
• All APHB/ UDA/ MC/ Municipalities/ Other Statutory
Bodies housing schemes for affordable housing shall
earmark at least 60% of the FAR/ FSI for affordable
housing units of carpet area of not more than 60 sq.m, in
addition 35% of the total number of dwelling units
constructed should be for EWS/ LIG I category.
• Another 20% of the houses to be constructed in the MIG
category.
• Government land shall be allotted on priority basis for
affordable housing projects in the state.
• The contractor/ developer for implementation of the
project shall be done through open tendering process.
• The Government land allotted for implementation of the
project shall be free from all encumbrances, with all
relevant clearances in place such as land use conversion
etc.
1716 Knight Frank Advisory Services
STATE POLICIES
• To promote investments in affordable housing in AP
through PPP and attract private developers Private
developers in the construction of EWS/LIG categories of
houses by offering various attractive incentives
• To create affordable rental housing for migrant workers
and other urban poor
• To dovetail with existing Central and State Government
schemes2 and other bilateral/multilateral assistance
programmes
• To promote innovations in environmentally sustainable,
low- cost building design and construction technology
Objectives:
• To address the housing shortage in AP for all sections of
the society with special emphasis on EWS, LIG, and MIG
categories in a time bound manner
• To undertake large scale construction of Affordable
Housing (with focus on EWS & LIG housing) by
dovetailing with existing Government of India schemes
and other bilateral/multilateral assistance programmes
• To make housing “liveable and affordable” for EWS/ LIG
categories by prescribing standards for unit cost, size,
specifications and planning norms under the policy
The following section provides highlights – definition / key parameters and models proposed for affordable housing projects in
3 states of India – Andhra Pradesh, Rajasthan and Karnataka.
ANDHRA PRADESH (AP) – THE ANDHRA PRADESH URBAN
DEVELOPMENT MISSION (APUDM)
Parameters for Affordable Housing:
Parameters Affordable Housing
MIG
EWS LIG I LIG II
Carpet Area (sq. m) 21-27 28 -40 41 -60 61 -80 Permissible Height Shall not exceed 15 m (Cellar and / or Stilt
as applicable + maximum up to 5 floors)
High rise permissible
Maximum selling price per unit (inc. cost of construction for super built-up area (30% over carpet area) but will not include maintenance deposit, registration and insurance)
INR 2.9-4.0
lakhs
INR 3.9-6.5
lakhs
INR 8.6-13
lakhs
INR 16.3-22
lakhs
Annual Family Income
Upto INR 1
lakhs
INR 1-2
lakhs
INR 2-5
lakhs
Above INR
5 lakhs
To achieve the objectives, the state has adopted a two pronged strategy:
Demand Side Interventions – Capital & Interest Subsidies
• Alignment of proposed housing scheme to Central guidelines to
access maximum subsidies for beneficiaries from the Centre
• Information regarding all central and state government subsidy
schemes would be made available through a single unified online
portal. All application and sanction of Centre/ State subsidy will be
routed and monitored through this online portal
Supply Side Interventions – Ensuring land bank availability
• Reservation of 10% residential land in development plans of new
urban areas
• Mandatory provision of marking either 10% of the total built up area
or 25% of total number of units, in all Group Development Scheme
Projects over plot size greater than 5 acres
• Creation and management of Land Bank for affordable housing by
taking stock of available government land
• Incentivise land - owners to opt for land - pooling for implementing
group housing schemes over plot size of 5 acres and more, by
allowing mixed development scheme inc. high rise for free- sale
residential and commercial components
RAJASTHAN – CHIEF MINISTER'S JAN AVAS YOJNA - 2015
Objectives:
• To achieve the objective of Affordable Housing for All by
creation of EWS/LIG housing stock to fulfill housing
shortage in the State.
• To attract private investment for construction of houses
for EWS/LIG segment of the society, by giving incentives
to the private developers.
• To motivate govt. agencies and private developers to take
up construction of Affordable Housing.
• To identify land for affordable housing which can be
monetized by inviting private participation on a large
scale.
• To expedite the process of construction, developers shall
be facilitated by fast track approvals.
AFFORDABLE HOUSING IN TAMIL NADU
1918 Knight Frank Advisory Services
Proposed Models & Parameters for Affordable Housing:
Provision 1A: Mandatory Provisions for Residential Schemes of ULBs/UITs/Development Authorities/RHB and Private Developers
Minimum required area
Land distribution for
EWS/LIG category
Sale Price
FAR
2 Hectare for Plotted development schemes and 5000 sq.m for Flat development
schemes
• For Rajasthan Housing Board (RHB) - 50% houses in case of plotted development
and 10% of FAR in case of flat development are to be reserved for EWS/LIG units.
• For UITs / Development Authorities / ULBs 25% of scheme area shall be reserved
for Plots/Flats for EWS/LIG category as the case may be.
• For Private Developers -
– Flat construction - 7.5% of proposed residential FAR area shall be reserved for
EWS/LIG units.
– Plotted development - 10% of residential saleable area to be reserved for EWS/LIG
plots with plot area of 30 to 45 sq.m and above 45 up to 75 sq.m respectively
Sale Price for flats shall be INR 1200/ sq.ft (Including INR 50 / sq.ft for maintenance
funds and INR 50/ sq.ft for EDC to ULB) for both EWS and LIG Units, out of which INR
1100/ sq.ft shall be paid to developer. In case of plots 25% of reserve price and 60% of
reserve price for EWS/LIG plots respectively.
The FAR proposed for EWS/LIG shall not be counted in the FAR calculation of main
project even if EWS/LIG units are provided on split location. As incentive in such
projects, standard FAR without betterment levy shall be increased by 0.50 over and
above standard FAR. Maximum FAR shall be as per building byelaws.
Provision 1B: Mandatory Provisions for the proposed industrial Areas of RIICO and Private Developers
Minimum required area
Land distribution for
EWS/LIG category
Sale Price
FAR
2 Hectare
5% of saleable area in new industrial schemes shall be reserved for EWS/LIG Housing.
Saleable area to be reserved for EWS/LIG plots with plot area of 30 to 45 sq.m and
above 45 up to 75 sq.m respectively
25% of reserve price and 60% of reserve price for EWS/LIG plots respectively.
As per building byelaws
Provision 2: Development of Affordable Houses by Private Developer on Private Land in Partnership
Minimum required area
Land distribution for
EWS/LIG category
Sale Price
FAR
2 Hectare
Minimum 50% of land proposed on the project for EWS/LIG and remaining 50% may
be used for residential development.
Sale Price shall be INR 1200/ sq.ft (Including INR 50/ sq.ft for maintenance funds and
INR 50/ sq.ft for EDC to ULB) for both EWS and LIG Units, out of which INR 1100/ sq.ft.
shall be paid to developer.
Up to 2.25 without betterment levy for the complete project including FAR consumed
for EWS/LIG
Provision 3A: Mandatory Provisions for Residential Schemes of ULBs/UITs/Development Authorities/RHB and Private Developers
Minimum required area
Land distribution for EWS/LIG category
Sale Price
FAR
1 Hectare
100% for EWS/LIG
To be decided by the developer.
Maximum FAR 2.25 plus incentive FAR on additional height. (FAR including incentive
FAR up to 2.25 will be allowed without betterment levy however betterment levy will
be charged on FAR proposed above 2.25).
Provision 3B: Development of EWS/LIG houses by Private Developer on whole of Private Land (Plotted development with G+3 format)
Minimum required area
Land distribution for
EWS/LIG category
Sale Price
FAR
1 Hectare
100% of total land area to be reserved for EWS/LIG. Maximum saleable area up to
70%. Minimum of 5% of the scheme area shall be reserved for park/green spaces
and 5% for facilities.
To be decided by the developer.
Not applicable
Provision 4A: (i) Affordable Housing on Government Land by Private Developer in 75:25 ratio on G+3 format.
(ii) Affordable Housing on Government Land by Private Developer in 75:25 ratio on multistoried format
Minimum required area
Land distribution for
EWS/LIG category
Sale Price
FAR
1 Hectare
The developer would take up development of total land however construction of
EWS/LIG shall be on minimum of 75% of the total land. Developer shall be free to
construct MIG-B/HIG flats/plots/houses (high rise permitted) on remaining maximum
of 25% of total land.
Sale Price shall be INR 1200/ sq.ft (Including INR 50/ sq.ft for maintenance funds and
INR 150/ sq.ft for ULB) for both EWS and LIG Units, out of which maximum INR
1000/ sq.ft shall be paid to developer depending on the bid.
Minimum 140 units per acre and maximum up to 2.25 FAR (without betterment levy)
shall be constructed on EWS/LIG component of scheme. For remaining part of the
scheme as per prevailing building byelaws.
AFFORDABLE HOUSING IN TAMIL NADU
2120 Knight Frank Advisory Services
Provision 4B: Provision 4B is construction of EWS/LIG units in the ratio prescribed on the basis of population of the city.
In this provision component of land other than EWS/LIG would be auctioned through open bidding. Provision 4B (i)
is applicable for the cities with population of 3 lakhs and above, Provision 4B (ii) is applicable for the cities with
population 1 - 3 lakhs and Provision 4B (iii) is for the cities below 1 lakh population
Minimum required area
Land distribution for
EWS/LIG category
Sale Price
FAR
1 Hectare
The developer would take up development of total land however construction of
EWS/LIG units shall be on minimum of 75% in Towns with 3 lakhs and above
population, 60% in Town with 1 lakhs and above up to 3 lakhs population and 50% in
Towns with less than 1 lakh population of the total land. Developer shall be free to
construct MIG-B/HIG flats/plots/houses (high rise permitted) on remaining maximum of
25%, 40% and 50% of total land respectively.
Sale Price shall be INR 1200/ sq.ft (Including INR 50/ sq.ft for maintenance funds and
INR 150/ sq.ft for ULB) for both EWS and LIG Units, out of which maximum INR 1100/
sq.ft shall be paid to developer depending on the bid.
Minimum 140 units per acre and maximum up to 2.25 FAR (without betterment levy)
shall be constructed on EWS/LIG component of scheme. For remaining part of the
scheme as per prevailing building byelaws.
Provision 4C: Development of Affordable Housing Projects in Joint Development Agreement
Minimum required area
Land distribution for
EWS/LIG category
Sale Price
FAR
10 Hectare
The developer would take up development of total land as per stipulated FAR however
construction of EWS/LIG shall be of minimum of 35% FAR of the total project.
Developer shall be free to construct MIGB/HIG flats/plots/houses (high rise permitted)
on the remaining area.
Sale Price shall be INR 1200/ sq.ft (Including INR 50/ sq.ft for maintenance funds and
INR 150/ sq.ft for ULB) for both EWS and LIG Units.
As per prevailing building byelaws.
Annual Income for EWS/LIG Categories:
• EWS – Upto INR 150,000 per year
• LIG – INR 150,000-300,000 per year
Unit area of EWS/LIG houses/plots: Super built up area for EWS/LIG units shall be (In all cases)
• EWS unit: 325-350 sq.ft (carpet area should not be more than 30 sq.m), plot area 30-45 sq.m
• LIG unit: 500-550 sq.ft (carpet area should not be more than 60 sq.m), plot area above 45 sq.m upto 75 sq.m
KARNATAKA – KARNATAKA AFFORDABLE HOUSING POLICY (KAHP) 2016
Objectives:
• To improve existing housing for BPL/EWS/LIG households
and build affordable housing stock to cater to the need of
future residents
• To create effective partnerships between the local, state
and central governments by aligning existing housing
schemes across them
• To work with poor urban households and communities in
order to enable sustainable implementation and outcomes
• To build effective partnerships with Private Developers to
accelerate the supply of affordable housing
Model 1:
Beneficiary Led House
Enhancement
To improve Kutcha housing, households require support to undertake incremental
additions, enhancements or make their house Pukka. Households must own the land
on which their house is located. In this model, a grant of INR 1.5 lakh will be availed
under provisions of the PMAY for beneficiaries living in Kutcha houses. Any remaining
cost of the house shall be borne by the beneficiary household.
This model supports households presently living in Kutcha houses that cannot be
enhanced or made Pukka, avail direct financial support in order to make a new Pukka
house. Households must own the land on which they intend to build the house.
Financial assistance of INR 1.5 lakhs under PMAY may be availed.
For households that do not avail financial assistance under the PMAY Beneficiary Led
House Construction vertical, the government may also facilitate subsidized loans for
beneficiaries of up to INR 6 lakhs with interest subsidy of 6.5 per cent from PMAY
Credit Linked Subsidy Scheme (CLSS).
To improve living conditions of households residing in slum areas, the Policy envisages
that the state government will provide budgetary support to concerned departments to
provide or upgrade site level basic services i.e. water and sanitation, drainage, roads,
street lighting, footpaths and community facilities. The government will accord priority
to existing tenable slums under this model and endeavour to extend this model to non-
slum areas including Unplanned and Unorganized colonies if all applicability and
eligibility clauses under this Policy are satisfied. This model can be used in
combination with Models 1 and 2 to enable incremental or new construction of
individual houses.
To encourage vertical redevelopment of slums in urban areas that face scarcity of land
and where majority of the housing is Kutcha, In- Situ Redevelopment model may be
implemented. Redevelopment includes demolishing all existing built structures in the
slum and building new housing and infrastructure for the existing households on the
same site. The Government may provide assistance in following manner:
- financial assistance under the PMAY
- FAR and TDR incentives to Private Developers
- adequate budgetary allocations to Public Development Agencies (PDAs) fast track
clearances and exemption from identified regulatory charges to such projects
Model 2:
Beneficiary Led New
House Construction
Model 3:
In-Situ Up gradation
Model 4:
In-Situ Slum Redevelopment
AFFORDABLE HOUSING IN TAMIL NADU
2322 Knight Frank Advisory Services
Model 5:
Plotted Development and
Sites with House and Services
The Government will enable reservation for Affordable Housing Units (AHU) in sites in
Plotted Development projects undertaken by Private Developers and PDAs. The
Government shall provide TDR incentives to Private Developers for the earmarked
portions of their sites. The Government will facilitate access to credit for beneficiaries
that are allotted sites under this model through the PMAY Credit Linked Subsidy
Scheme (CLSS).
- Private Developers: Reservation will be mandated for all projects of project area of
1 hectare or more. 10 per cent of the residential portion of the project site shall be
reserved for AHUs
- PDAs: Reservation will be mandated for all projects of project area of 1 hectare or
more. 35 per cent of the Residential portion of the project area shall be reserved for
AHUs.
- Joint Venture: Private Developers may enter into a Joint venture agreement with
PDAs by reserving at least 25 per cent of the Residential portion of the site for
AHUs
In order to increase build new affordable housing units at large scale, the Government
will enable reservation for AHUs in the built-up area in Group Housing (apartments) and
Township (mixed use) projects constructed by Private Developers and PDAs.
Reservation shall be mandated for all projects of project area of 1 hectare or more.
Other details are as follows:
Model 6:
Group Housing and
Township Projects
Details
Reservation for AHUs:
Township –
Group Housing –
Private Developers
10 per cent of the
residential portion of the
site
10 per cent of the built-up
area
PDAs
33 per cent of the
residential portion of the
site
33 per cent of the built-up
area
FAR:
Township –
Group Housing –
Extra FAR equivalent to the built-up area that would be
available from the portion of the site reserved for AHUs as
per Zoning Regulations
Extra FAR to the extent of the built-up area of the AHUs
The Government will support PDAs to avail central financial assistance of up to INR 1.5
lakhs through the Affordable Housing in Partnership vertical of the PMAY if at least 35
per cent of the houses in the project are for EWS category (as per PMAY) and a single
project has at least 250 houses.
Model 7:
Affordable Group Housing
in Partnership
In order to encourage public-private partnerships in building new affordable housing
units, PDAs shall enter into partnerships with Private Developers on their land or on
identified vacant government land. The Government will provide FAR and TDR
incentives to Private Developers for undertaking projects under this model. The
Government will also facilitate fast track clearances and exemption from identified
regulatory charges to such projects.
Partnership with private developers on
their land
Partnership with private developers on
vacant government land
- Projects with land area of 1 hectare or
more will be eligible for this model
- Private Developers can develop AHUs
in a proportion of their land over and
above the mandatory reservation as
per Model 6.
- Developers will get additional FAR
equivalent to the built-up areas of the
AHUs. This FAR has to be consumed
on the same site.
- Financial assistance of up to INR 1.5
lakhs per house under the Affordable
Housing in Partnership vertical of the
PMAY
- Private Developers can develop
AHUs on at least 40 per cent of
identified vacant government land.
Remaining portion of the land may be
transferred to the developer with full
use rights as per the local zoning
regulations
- The Government will support PDAs to
avail central financial assistance of up
to INR 1.5 lakhs through the
Affordable Housing in Partnership
vertical of the PMAY if at least 35 per
cent of the houses in the project are
for EWS category (as per PMAY) and
a single project has at least 250
houses
Annual Income for EWS/LIG Categories:
• EWS – INR 87,600-150,000 per year
• LIG – INR 150,000-300,000 per yearUnit area of EWS/LIG houses/plots: Super built up area for EWS/LIG units shall be
(In all cases)
Housing Unit
For improved existing housing under Models 1 & 3
New housing – plotted development under Model 5
New housing – site with house services under Models 2 & 5
New housing – Group Housing under Models 4,6 & 7
Area norms for Affordable Housing Units
Size Range
Minimum 15 sq.m carpet area
25-100 sq.m
Minimum 25 sq.m plot with a single room, toilet & bathroom
of total 15 sq.m carpet area
30-60 sq.m carpet area
AFFORDABLE HOUSING IN TAMIL NADU
URBANIZATION IN TAMIL NADU
Urbanization in the state has been on the increase since
1901. With more than 48% of urban population, Tamil Nadu
is one of the most urbanized states in the country. Tamil
Nadu ranks first among the large states in the country and
third in absolute terms on share of urban population in total
population of the State. While the percentage of urban
population in the country increased from 10.29% to 31.2%
during 1911-2011, Tamil Nadu registered a much higher
percentage increase i.e., from 15.07% to 48.5% during the
above period.
The figures below show the urbanization trend in Tamil Nadu
and India:
2524 Knight Frank Advisory Services
TAMIL NADUSTATE OVERVIEW
Tamil Nadu - State Snapshot
Land Area 130,058 sq.km
Population (Census 2011) 72,147,030
Population Density 555 persons per
sq.km
Sex Ratio (Females per 1000 Males) 995
Literacy Rate 80.09%
Decadal Population Growth (2001-2011) 15.60%
State GDP at current prices (2013-14) INR 85,423,816
lakhs
Per Capita Income at current prices INR 112,664
Source: tn.gov.in, Census India, Knight Frank Research
It is the eleventh-largest state in India by area and the sixth-
most populous. According to Census 2011, the population
of India is around 1210 mn and that of Tamil Nadu is 72 mn
thus, accounting for approximately 6% of country's total
population. Further, the state has higher proportion of urban
population at about 48% as compared to national average
of 31%.
The map below shows the growth of urban
population across Tamil Nadu:
Source: Census 2011
AFFORDABLE HOUSING IN TAMIL NADU
MAJOR URBAN CENTERS
The state comprises 32 urban centers and the chart below
shows population (Census 2011) of all the centers.
2726 Knight Frank Advisory Services
Eight cities – Chennai, Coimbatore, Madurai, Tiruchirappalli,
Tiruppur, Salem, Erode and Tirunelveli contribute more than
75% of the total population of all the urban centers.
SEC CLASSIFICATION & INCOME PROFILE
SEC Definition:
SEC
A1a
A2
B1/ B2
C
D
E
Education
Graduate & Post
Graduates (General &
Professional)
Graduate & Post
Graduates (General &
Professional)
SSC + < Grad
Schooling 5 – 9 years
Schooling upto 4
years
Illiterate
Occupation
SEP / Officer & Execs
(Senior and Middle level)
Shop Owners, Supervisor
level, Officers & Execs
(Junior Level)
Skilled Workers, Petty
Traders, Clerk, Sales man
Skilled / Unskilled
Workers, Petty Traders,
clerk
Socio-economic Classification - SEC profile of the state
considering urban households across the districts shows
that majority of the households (44%) come under SEC D &
E category.
The proportion of urban households in SEC A, B, C, D & E in
total for the eight urban centers of Chennai, Coimbatore,
Madurai, Tiruchirappalli, Tiruppur, Salem, Erode and
Tirunelveli remains same as for the overall state.
The table below gives details regarding proportion of urban
households in each SEC category for each city
Proportion
of Urban
Households
Chennai
Coimbatore
Madurai
Tiruchirappalli
Tiruppur
Salem
Erode
Tirunelveli
SEC A
12%
8%
8%
9%
8%
5%
5%
5%
SEC B
19%
17%
17%
17%
17%
14%
14%
14%
SEC C
31%
35%
34%
32%
34%
30%
30%
30%
SEC D&E
38%
41%
41%
42%
41%
52%
52%
52%
Source: Indicus Market Skyline 2013-14, Knight Frank Research
Annual Income profile of the state considering urban
households across the districts shows that majority of the
households (40%) come under income bracket of less than
INR 75,000.
The proportion of urban households in various income
brackets in total for the eight urban centers of Chennai,
Coimbatore, Madurai, Tiruchirappalli, Tiruppur, Salem, Erode
and Tirunelveli remains fairly same as for the overall state.
As analyzed from the income profile of the cities, about 70%
of the urban households come under less than INR 300,000
annual income. It can therefore be inferred that significant
population falls under EWS and LIG segment as per
definition under PMAY
The table below gives details regarding proportion of urban
households in each bracket of annual household income for
each city:
Proportion
of Urban
Households
Chennai
Coimbatore
Erode
Madurai
Salem
Tiruchirappalli
Tirunelveli
Tiruppur
< INR
75,000
26%
35%
44%
42%
49%
37%
51%
39%
INR
75,001-
150,000
16%
17%
19%
17%
17%
16%
17%
18%
INR
150,001-
300,000
15%
16%
15%
16%
13%
14%
15%
17%
INR
300,001-
500,000
11%
11%
9%
10%
8%
11%
8%
11%
Source: Indicus Market Skyline 2013-14, Knight Frank Research
INR
500,001-
1000,000
12%
0%
8%
8%
7%
12%
6%
9%
> INR
1000,000
20%
11%
6%
7%
6%
10%
4%
7%
AFFORDABLE HOUSING IN TAMIL NADU
While the urban population in Tamil Nadu has grown by 27%
between 2001 -2011, the slum population has grown from
28.38 lakh to approximately 59 lakh i.e, growth of 105%.
Hence, the rapid urbanization being witnessed by the State
reflects the economic growth achieved by the State and at
the same time the challenge of creating sustainable urban
infrastructure and need to cater to the growing housing
needs in the urban areas.
Tamil Nadu has the fifth most noteworthy housing shortage in
India estimated to 1.25 million out of nationwide housing
shortage 18.78 million. Housing shortage is majorly driven by
LIG and EWS Segments as majority of the development in
Tamil Nadu caters MIG and HIG.
2928 Knight Frank Advisory Services
HOUSING SCENARIO IN TAMIL NADU
The Hon'ble Chief Minister has announced the “Vision 2023”,
a long term plan for infrastructure development for rapid
economic growth in Tamil Nadu. This envisages, among
others, the provision of houses with basic infrastructure
facilities for all urban slum families in Tamil Nadu to make the
cities / towns slum free before 2023 at an estimated cost of
INR 65,000 crore. The programme is being implemented by
utilizing the grants from Government of India under various
programmes especially Pradhan Mantri Awas Yojana (PMAY),
State Government funding through budgetary support and by
availing loan by Tamil Nadu Slum Clearance Board from
various financial institutions.
TNSCB has been designated as the Mission Directorate for
'Housing for All' in Tamil Nadu and State Level Nodal Agency
(SLNA) for implementing housing projects under the verticals
of (i) “In-situ” Slum Redevelopment, (ii) Affordable Housing in
Partnership and (iii) Subsidy for Beneficiary-led Individual
House Construction under 'Housing for All' programme. A
memorandum of agreement has been entered between the
State Government and Government of India to implement the
'Housing for All' programme in Tamil Nadu.
AFFORDABLE HOUSING IN TAMIL NADU
3130 Knight Frank Advisory Services
INTRODUCTION
Chennai is the state capital and the most populous urban
centre in all of Tamil Nadu. Chennai, formerly known as
Madras, is India's fourth largest metropolitan city. Serving as
the gateway of the southern part of India, the city is located
along the 12-kilometre-long Marina Beach on the
Coromandel Coast of the Bay of Bengal. It forms the city's
east coast and is one of the longest beaches in the world.
The four National Highways lead to Kolkata (NH-5),
Bangalore (NH-4), Thiruvallur (NH-205) and Trichy (NH-45).
The NH-4 and NH-5 are a part of the golden quadrilateral
project. In addition to these, Arcot Road, Kamarajar Salai,
Thiruvottiyur High Road, Old Mahabalipuram Road and East
Coast Road are the other important radial roads in the
Chennai Metropolitan Area (CMA).
The central part of the city constitutes the old city areas of
Alwarpet, Boat Club Road, Kilpauk, Mylapore,
Nungambakkam, West Mambalam, etc. while North Chennai
constitutes the areas of Avadi, Ambattur, Padi, Perambur, and
Manali. In the south, the area comprises of Adyar, Besant
Nagar, OMR, Guindy, Tambaram, Velachery, etc. The western
part of the city comprises Anna Nagar, Koyambedu,
Mogappair, Porur and Ambattur.
Chennai has witnessed a great deal of industrial expansion in
recent times with the mushrooming of engineering plants,
automobile-assembly plants, educational institutions, textiles,
leather goods, chemicals, computers, granite, hardware and
shipping. The city is referred to as the 'Detroit of South Asia'
as it houses about 40 per cent of India's automobile industry.
It is also recognised as one of the country's important
destinations for software technological know-how, being a
major centre for IT and ITeS outsourcing
CITY OVERVIEW – CHENNAI
DEMOGRAPHIC PROFILE
The population of Chennai has grown from 7.04 mn in 2001
to 8.87 mn in 2011. The table shows the population trend in
the past:
Majority of the urban households in Chennai fall under SEC D
& E constituting of unskilled working population followed by
skilled workers and Graduates and post graduates
professionals
Year
1991
2001
2011
2017E
Source: Indicus Market Skyline 2013-14, Knight Frank Research
Population (no.)
5,818,000
7,041,000
8,871,000
10,190,031
Decadal Growth (%)
21.02
25.99
14.87
CONNECTIVITY
Road network of Chennai is dominated by Radial pattern
converging George Town, which Forms the Central Business
District (CBD) of The city for goods and passengers
movement, Assuming a pivotal role in development of the
city. As per CMDA Second Master Plan, the Chennai
Municipal Corporation is maintaining about 2,875 km of road,
of which 130 km are highway roads, 222 km are bus route
roads and 2475 km are interior roads and by lines with a per
capita road length of 0.6 m per capita
NH 4 - Bangalore
NH 45 - Trichy
Airport
ECR
OMR
Railway Stn.
Port
NH 5 - Kolkata
RESIDENTIAL MARKET OVERVIEW
Chennai residential market that had just begun to show some
promise of a recovery during H1 2017, once again broke new
lows in terms of sales and supply numbers during H2 2017.
Bogged down by the ongoing slowdown in the country in
addition to its own issues ranging from political uncertainty,
to the near catastrophic floods, the Chennai residential
market had been in a downward spiral over the past three
years. This lackluster demand scenario in addition to the
implementation of the Real Estate Regulation Act and the
GST Act spooked the already skittish developer's community
into a virtual stasis, which has caused a 33% year-on-year
(YoY) drop in H2 2017 residential supply levels, and pushed
down the annual supply number under 10,000 units for the
first time during this decade.
Both supply and sales for the Chennai residential market
came in at their lowest levels since 2011 in terms of yearly
and half-yearly numbers. The half yearly launches and
absorption represent an 86% and 56% drop, respectively,
from peak levels during H1 2011.
The comparatively affordable locations of South Chennai
saw the most development activity by far, as two third of the
unit launches during H2 2017 took place in locations such
as Pallavaram, Mahindra World City, SIPCOT – OMR Road,
Thalambur and Sholinganallur
Micro-
Markets
Central Chennai
West Chennai
South Chennai
North Chennai
Location
T Nagar, Nungambakkam,
Kodambakkam, Adyar, Kilpauk
Porur, Ambattur, Mogappair,
Iyyappanthangal, Sriperumbudur
Perumbakkam, Chrompet,
Sholinganallur, Guduvancheri,
Kelambakkam
Tondiarpet, Kolathur, Madhavaram,
Perambur
Demand has been largely consistent with the upcoming
supply as the south and west micro markets that contain the
relatively cheaper inventory have dominated the demand pie
consistently over the three Locations along the OMR and
GST roads in the southern micro markets far outstrip their
peers in other parts of the city in terms of buyer preference
as they offer the most appropriate mix of relatively affordable
housing, connectivity to workplaces and a reasonably well-
developed, social infrastructure.
Western locations such as Maduravoyal and Thiruverkadu
that had been experiencing increasing buyer interest in
recent periods saw some of that interest dwindle as prices
have fast approached those of locations in the south that
have comparatively better residential dynamics and will be
naturally preferred by buyers with comparable budgets.
AFFORDABLE HOUSING IN TAMIL NADU
3332 Knight Frank Advisory Services
INCOME SEGMENT ANALYSIS
Based on Indicus data 2013 – 2014, majority of the urban
households come under EWS segment having annual
household income of less than INR 3 lakhs and LIG segment
having annual household income in the range of 3 to 5 lakhs.
This segment forms the primary target for affordable housing
developments in the region.
IDENTIFYING CURRENT AFFORDABILITY
Household Income (Per Annum)
Household Distribution (%)
Maximum EMI (INR)
Maximum Loan Eligibility (INR in lakhs)
(8.6% interest rate, 30 year loan tenure)
Buyer's own contribution (INR in lakhs)
(Assuming 90% loan upto 30 lacs and
80% loan upto 75 lacs)
Affordable House Property Value
(INR in lakhs)
Unit Size (sq.ft)
Price (INR/sq.ft)
suitable location considering unit size
and price
Affordability in Chennai
Less than 3 lakhs
72%
10,000
12.87
1.29
14.16
550
2574
Avadi
3 to 5 lakhs
10%
12,000 - 20,000
15.44 - 25.74
1.54 - 2.57
16.98 - 28.31
550 - 850
3087 - 3330
Thaiyur, Avadi,
Thirumullaivoyal,
Singaperumal koil,
Mevalurkuppam,
Sriperumbudur
5 to 10 lakhs
9%
20,000 - 40,000
25.74 - 51.48
2.57 - 10.29
28.31 - 61.77
850 - 1350
3330 - 4575
Navallur,
Kelambakkam,
Mangadu,
Thiruvottiyur,
Ambattur
More than 10 lakhs
9%
48,000
61.78
11.36
73.14
1550
4718
Madhavaram,
Manapakkam,
Pammal,
Madipakkam,
Tambaram,
Chittlapakkam,
Pallikaranai
SELECT AFFORDABLE PROJECTS
Project Name
Earth Homes
Pearl Iris
Smart Town
Happinest
Manjari
SSM Nagar
S. No.
1
2
3
4
5
6
Developer
KG Builders
GP Homes
Casa Grande
Mahindra
Lifespaces
Arun Excello
Compact Homes
SSM Builders &
Promoters
Location
Siruseri
Ambattur
Thazhambur
Avadi
Mevalurkuppam
Perungalathur
Capital Value
(INR/sq.ft)
2,900
3,799
2,799
3,080
3,250
4,500
Unit Size Range
(sq.ft)
930
662
569
348
430
633
Ticket size
(INR)
2,696,000
2,515,000
1,592,631
1,071,840
1,397,500
2,848,500
Source: Knight Frank Research
AFFORDABLE HOUSING IN TAMIL NADU
3534 Knight Frank Advisory Services
CONNECTIVITY
Source: Open Street Maps
Coimbatore is well connected to other cities of Tamil Nadu via Avinashi Road, Sathy Road, Thadagam Road, Trichy Road,
Perur Road and Pollachi Road.
INFRASTRUCTURE INITIATIVES
• Planned semi-circular ring road connecting Trichy road -
Airport - Kalapatti -Saravanampatti – Mettupalayam Road
is expected to improve connectivity in Coimbatore
suburbs
• Modernization and expansion of Coimbatore Airport
which includes the creation of a parallel runway, taxiways,
aprons and new passenger terminal buildings
• Slum redevelopment plans proposed as per the Slum free
city action plan
• NHAI has proposed six-lane road from Coimbatore to
Karur
• Construction underway for a road bridge near
Sungampudhur Bye Pass Road towards Palghat Road
• Construction underway for a flyover at Neelambur
junction on Avinashi road and six laning of Neelambur –
Chengapalli junction
• Proposed bridge near HOPE College on Avinashi Road to
facilitate people to cross the railway track
• Planned integrated bus terminus in Vellalore decongesting
the traffic of mofussil buses
CITY OVERVIEW – COIMBATORE
INTRODUCTION
Coimbatore is the second largest city in Tamil Nadu following
Chennai and 16th largest agglomeration in India. The district
spreads across 4,732 sq.km with the population of 3.4 mn. It
is one of the fastest growing tier II cities in India. Further, it is
a major contributor of textile manufacturing sector followed
by recent development of IT SEZs in northern part of the city.
Independent houses and villas are given equal preference as
residential apartments in this city.
DEMOGRAPHIC PROFILE
The population of Coimbatore has grown from 2.9 mn in
2001 to 3.4 mn in 2011. The table below shows the
population trend in the past:
About 40% of the urban households in Coimbatore fall under
SEC D & E constituting of unskilled working population.
Year
1991
2001
2011
2017E
Source: Census 2011
Population (no.)
2,493,715
2,916,620
3,458,045
3,830,021
Decadal Growth (%)
16.96
18.56
10.75
AFFORDABLE HOUSING IN TAMIL NADU
RESIDENTIAL MARKET OVERVIEW
Avinashi Road and Race Course road in Coimbatore are the
elite residential micro-markets with major demand for luxury
projects. More recently, Race Course road has been
witnessing commercial development on erstwhile bungalow
plots. Avinashi Road is one of the main arterial roads of the
city and the prime real estate corridor. More recently the
location has been witnessing commercial development on
erstwhile bungalow plots On-going infrastructure
development in terms of 6-laning of the road, trade centre,
airport expansion and government promoted IT SEZ has led
to increased development here.
Trichy Road is located in proximity to Avinashi Road. Real
estate development on the corridor can be attributed to the
spill over demand from Avinashi Road.
Mettupalayam Road is one of the established residential
corridors with residential micro-markets such as Sai Baba
3736 Knight Frank Advisory Services
INCOME SEGMENT ANALYSIS
Based on Indicus data 2013 – 2014, more than half of the
urban households come under EWS segment having annual
household income of less than INR 3 lakhs. This segment
forms the primary target for affordable housing developments
in the region.
IDENTIFYING CURRENT AFFORDABILITY
Household Income (Per Annum)
Household Distribution (%)
Maximum EMI (INR)
Maximum Loan Eligibility (INR in lakhs)
(8.6% interest rate, 30 year loan tenure)
Buyer's own contribution (INR in lakhs)
(Assuming 90% loan upto 30 lacs and
80% loan upto 75 lacs)
Affordable House Property Value
(INR in lakhs)
Unit Size (sq.ft)
Price (INR/sq.ft)
suitable location considering unit size
and price
Affordability in Chennai
Less than 3 lakhs
68%
10,000
12.87
1.29
14.16
550
2574
Dhaliyur,
Veerakeralam
3 to 5 lakhs
11%
12,000 - 20,000
15.44 - 25.74
1.54 - 2.57
16.98 - 28.31
550 - 850
3087 - 3330
Vilankuruchi,
Kalapatti,
Vedapatti,
Kuruchi,
Kovaipudur,
Kuniyamuthur
5 to 10 lakhs
10%
20,000 - 40,000
25.74 - 51.48
2.57 - 10.29
28.31 - 61.77
850 - 1350
3330 - 4575
Saravanampatti,
Singanallur,
Ondipudur,
Vadavalli, PN
Pudur, Vedapatti,
Podanur,
Koundampalayam
More than 10 lakhs
11%
48,000
61.78
11.36
73.14
1550
4718
Puliakulam,
Sowripalayam,
Peelamedu,
Ramanadhapuram,
Ganapathy
Colony and R.S.Puram. Residential projects in the micro-
market cater to MIG & Upper MIG segments.
Saravanampatti and Ganapathi located off Sathy Road and
Trichy are primarily witnessing affordable projects.
Over the last decade the city witnessed the shift in
preference for apartments over independent housing. Current
residential development in Coimbatore constitutes majorly of
apartments. Over the past few years the market has
witnessed the development of township projects by national
developers such as Sobha, Puravankara, True Value Homes.
Premium segment residential demand is restricted to the city
locations of Race Course road, R.S.Puram and Avinashi road.
Peripheral markets cater to the mid-segment demand. Large
scale projects and townships are being developed towards
the south and west of the city. Coimbatore residential market
has been pioneer to Senior Living projects in India.
SELECT AFFORDABLE PROJECTS
Project Name
Shresta
Palms
Garden City
Tech City
Abhinav
Coconut Grove
Green Park
Eternia II
Saidhan
Enclave
Ramprasath
paradise
S. No.
1
2
3
4
5
6
7
8
9
10
Developer
Sriram Properties
Prozone
Town and City
Developers
Town and City
Developers
RR Housing
Ramani Realtors
Provident Housing
Casa Grande
Victoria Realtors
Afcon Builders
Location
Sundarapuram
Sathy Road
Vedapatti
Saravanampatti
Vedapatti
Singanallur -
Vellalore Road
Off Perur Main
Road
Off Sathy Road
Kovaipudur
Veerapandi
Capital Value
(INR/sq.ft)
2946
3600
2800
3000
2700
3300
4056
3400
3200
2700
Unit Size Range
(sq.ft)
645
721
336 - 625
408
409 - 810
568 - 870
542 - 888
633 - 644
583 - 1033
650 - 1102
Ticket size
(INR)
1,900,170
2,595,600
940,800 -
1,750,000
1,224,000
1,104,300 -
2,187,000
1,874,400 -
2,871,000
2,198,352 -
3,601,728
2,152,200 -
2,189,600
1,865,600 -
3,305,600
1,755,000
Source: Knight Frank Research
AFFORDABLE HOUSING IN TAMIL NADU
3938 Knight Frank Advisory Services
CITY OVERVIEW – TRICHY
INTRODUCTION
Tiruchirappalli is one of the early colonized cities located
beside the Kaveri River in Tamil Nadu. The district spreads
across 4,509 sq.km with the population of 2.7 mn.
Engineering equipment fabrication and manufacturing are the
major economic drivers in this city after the establishment of
Railway Workshop and BHEL which induced several ancillary
industries around the city. Flour mills and distilleries are other
industries followed by manufacturing sector. In contrast with
competing tier II cities, residential apartments are much
preferred development in this city
DEMOGRAPHIC PROFILE
The population of Trichy district has grown from 2.4 mn in
2001 to 2.7 mn in 2011. The table below shows the
population trend in the past:
About 42% of urban households in Trichy fall under SEC D &
E constituting of unskilled working population.
Year
1991
2001
2011
2017E
Source: Census 2011
Population (no.)
2,196,473
2,418,366
2,722,290
2,922,684
Decadal Growth (%)
10.10
12.57
7.36
CONNECTIVITY
Source: Open Street Maps
Trichy is located in the geographic center of Tamil Nadu which facilitates better connectivity to urban major centers and other
districts of the state. The road network primarily comprises national highways and state highways connecting the city to
Thanjavur, Pudukkottai, Madurai, Dindigal, Karur, Ariyalur, Thuraiyur and Chennai with NH-5 being the major road connecting
Dindukkal and Trichy.
Trichy Bypass and flyovers in traffic congestion areas are recent key improvements in Trichy road network.
Trichy International Airport located at Ramanadhapuram Road connects the city with domestic destinations as well as Middle
East and South East Asian countries
INFRASTRUCTURE INITIATIVES
• Proposed Hitech Engineering Industry Governance and
Habitat around Tiruchirappalli (HEIGHT)
• Road over bridge on Uyyakondan channel near Palakkarai
police station
• River bridge on EVR road near Court and on Kulumani
road on Kudamuruty river
• Formation of 120 feet wide ring road around Trichy City
with a circumference of about 80 Km and a radius of 10 to
15 Km from Central Business District
• 100 feet wide road connecting Madurai road and Dindugal
road through Pirattiyur village.
• 80 feet wide road connecting Boulevard road and
Chennai bye-pass road
• Link road connecting Dindugal road and Karur road along
the Koraiyur river bund
• Truck terminal along Dindugal road to smoothen traffic
flow of trucks
• Proposed Underground Sewerage Scheme for
corporation limits under National River Conversation
Project
AFFORDABLE HOUSING IN TAMIL NADU
4140 Knight Frank Advisory Services
RESIDENTIAL MARKET OVERVIEW
Srirangam
Srirangam is one the developing residential areas in Trichy.
This micro market has witnessed major demand as far as
residential market is concerned. Residential projects
developed in this micro market cater predominantly to MIG
segment. Ranganathanswamy temple is one of the factors
which drive the residential market in this location.
Thillai Nagar
Thillai Nagar is one of the elite property markets in Trichy
comprising both retail high-street and residential
development. It has excellent connectivity to public
infrastructure facilities and close proximity to Trichy Fort
Railway station. Supply of Residential development is limited
in this micro market due to higher capital values and scarce
availability of land parcel.
Toll Gate
Tollgate is one of affordable residential markets located in the
outskirts of the city. Being the junction for connecting major
INCOME SEGMENT ANALYSIS
Based on Indicus data 2013 – 2014, more than half of the
urban households come under EWS segment having annual
household income of less than INR 3 lakhs. This segment
forms the primary target for affordable housing developments
in the region.
cities in Tamil Nadu, close proximity to Trichy city and lower
capital values, the micro market has gained momentum in
residential development which caters to MIG segmet.
KK Nagar
KK Nagar is another developing locality in Trichy located in
close proximity to Trichy International Airport. The micro
market was primarily a residential area with recent
commercial and retail developments. Presence of major
supermarkets and reputed educational institutes drives the
realty market in this location.
Edamalaipatti Pudur
Edamalaipatti Pudur or E.Pudur is located on Madurai Road
and has proximity to Trichy central bus terminus. Major
residential developments were seen in this location in recent
years. Primary residential areas in this micro market are RMS
Colony, SBI colony, Francina colony and Pillayar kovil street.
IDENTIFYING CURRENT AFFORDABILITY
Household Income (Per Annum)
Household Distribution (%)
Maximum EMI (INR)
Maximum Loan Eligibility (INR in lakhs)
(8.6% interest rate, 30 year loan tenure)
Buyer's own contribution (INR in lakhs)
(Assuming 90% loan upto 30 lacs and
80% loan upto 75 lacs)
Affordable House Property Value
(INR in lakhs)
Unit Size (sq.ft)
Price (INR/sq.ft)
suitable location considering unit size
and price
Affordability in Chennai
Less than 3 lakhs
67%
10,000
12.87
1.29
14.16
550
2574
Manikandam,
Illuppur
3 to 5 lakhs
11%
12,000 - 20,000
15.44 - 25.74
1.54 - 2.57
16.98 - 28.31
550 - 850
3087 - 3330
Srirangam,
Thiruvanaikovi
5 to 10 lakhs
12%
20,000 - 40,000
25.74 - 51.48
2.57 - 10.29
28.31 - 61.77
850 - 1350
3330 - 4575
Edamalaipatti
Pudur, Thiruvanai
kovil, Palpannai,
Woraiyur, KK
Nagar Palpannai,
Sangiliyandapuram
More than 10 lakhs
10%
48,000
61.78
11.36
73.14
1550
4718
Kallanai Road,
Thillai nagar,
Woraiyur
SELECT AFFORDABLE PROJECTS
Project Name
Luxor
The Majestic
Citi Square
Tamizh Kaveri
Excell Premier
Nakshatra
S. No.
1
2
3
4
5
6
Developer
South India
Shelters
Sebco Property
Bharath
Constructions
Tamizh
Constructions
Excell Builders
Rohini Housing
Developers
Location
Manigandam
Pudukkottai
Highway
Woraiyur
Srirangam
Old Pal Pannai
Sangiliyandapuram
Capital Value
(INR/sq.ft)
2,099
2,500
4,000
3,900
3,650
3,800
Unit Size Range
(sq.ft)
585 - 613
763
650
637
736
657 - 827
Ticket size
(INR)
1,227,915 -
1,286,687
1,907,500
2,600,000
2,484,300
2,686,400
1,839,600 -
3,142,600
Source: Knight Frank Research
AFFORDABLE HOUSING IN TAMIL NADU
4342 Knight Frank Advisory Services
CITY OVERVIEW – MADURAI
INTRODUCTION
Madurai located on the banks of Vaigai River, is the third
most populated city in Tamil Nadu. The district spreads
across 3,710 sq.km with the population of 3.0 mn.
Manufacturing of rubber, textiles and automobile
components are the major economic drivers of the city and it
is a significant tourist destination with seasonal influx of
foreign tourists. The southern bank of Vaigai River comprises
the 'Old Town' where the city of Madurai developed around
the Meenakshi Amman Temple. Supply of residential
apartments in this city is limited due to higher demand and
acceptance for villas & independent houses by the buyers
DEMOGRAPHIC PROFILE
The population of Madurai district has grown from 2.5 mn in
2001 to 3.0 mn in 2011. The table shows the population trend
in the past. Further, there was a deflection in decadal growth
of Madurai city from 1991 to 2001 due to the bifurcation of
Madurai and Theni districts.
Majority of the urban households in Madurai fall under SEC D
& E constituting unskilled working population
Year
1991
2001
2011
2017E
Source: Census 2011
Population (no.)
2,400,339
2,578,201
3,038,252
3,352,803
Decadal Growth (%)
7.41
17.84
10.35
CONNECTIVITY
Source: Open Street Maps
The network of roads in the Madurai Corporation adds up to 615 km with radial roads towards CBD along Dindigul Road,
Melur Road, Ramnad Road and Tirunelveli Road. High traffic volume on these roads has led to traffic congestion. There is an
Outer Ring Road that runs along the periphery of the city. In addition to this to address congestion issues, the Corporation of
Madurai has proposed to construct two ring roads namely intermediate and inner ring roads.
There are a number of bridges and causeways constructed across the river Vaigai to establish good connectivity. Albert Victor
Bridge (A.V. Bridge) and bridge over the old Kalpalam causeway play a major role in handling traffic.
Madurai is an important junction on the Southern Railway line and is connected with some of the major stations like Chennai,
Howrah and Mumbai. Madurai airport is approximately 13 km. from the Madurai Railway station and provides connectivity to
Bangalore, Chennai and Mumbai.
INFRASTRUCTURE INITIATIVES
• Up gradation of Madurai ring road in length of 27.2 Km
(PPP) - The project envisages widening the Madurai ring
road from two to four lane proposed by Tamil Nadu Road
Infrastructure Development Corporation
AFFORDABLE HOUSING IN TAMIL NADU
4544 Knight Frank Advisory Services
RESIDENTIAL MARKET OVERVIEW
Othakkadai, Vilangudi, Kochadai, Madakkulam,
Moondrumavadi, Andalpuram and KK Nagar are the major
residential micro markets in Madurai that have witnessed
considerable residential group housing developments in
recent years.
Othakadai, Vilangudi, Moondrumavadi: Being located in
the eastern part of Madurai with close proximity to
Ilanthakulam IT SEZ and upcoming infrastructure facilities,
these micro markets had unlocked the realty market for
residential group housing development.
Kochadai is a prime residential market located along Melakal
road with proximity to by-pass road. Being located in less
INCOME SEGMENT ANALYSIS
Based on Indicus data 2013 – 2014, more than half of the
urban households come under EWS segment having annual
household income of less than INR 3 lakhs. This segment
forms the primary target for affordable housing developments
in the region.
traffic congestion area within the corporation limit and
availability of land parcel, the demand for real estate
developments in this micro market has recently increased.
This micro market caters primarily to MIG segment.
Andalpuram and KK Nagar are the elite residential micro
markets in Madurai with close proximity to CBD. This micro
market caters majorly HIG segment followed by MIG
segment.
Regardless of supply trend of residential apartments, it is
observed that villa projects have higher absorption level than
residential apartments driven by end user preference.
IDENTIFYING CURRENT AFFORDABILITY
Household Income (Per Annum)
Household Distribution (%)
Maximum EMI (INR)
Maximum Loan Eligibility (INR in lakhs)
(8.6% interest rate, 30 year loan tenure)
Buyer's own contribution (INR in lakhs)
(Assuming 90% loan upto 30 lacs and
80% loan upto 75 lacs)
Affordable House Property Value
(INR in lakhs)
Unit Size (sq.ft)
Price (INR/sq.ft)
suitable location considering unit size
and price
Affordability in Chennai
Less than 3 lakhs
67%
10,000
12.87
1.29
14.16
550
2574
Manikandam,
Illuppur
3 to 5 lakhs
11%
12,000 - 20,000
15.44 - 25.74
1.54 - 2.57
16.98 - 28.31
550 - 850
3087 - 3330
Srirangam,
Thiruvanaikovi
5 to 10 lakhs
12%
20,000 - 40,000
25.74 - 51.48
2.57 - 10.29
28.31 - 61.77
850 - 1350
3330 - 4575
Edamalaipatti
Pudur, Thiruvanai
kovil, Palpannai,
Woraiyur, KK
Nagar Palpannai,
Sangiliyandapuram
More than 10 lakhs
10%
48,000
61.78
11.36
73.14
1550
4718
Kallanai Road,
Thillai nagar,
Woraiyur
SELECT AFFORDABLE PROJECTS
Project Name
Luxor
The Majestic
Citi Square
Tamizh Kaveri
Excell Premier
Nakshatra
S. No.
1
2
3
4
5
6
Developer
South India
Shelters
Sebco Property
Bharath
Constructions
Tamizh
Constructions
Excell Builders
Rohini Housing
Developers
Location
Manigandam
Pudukkottai
Highway
Woraiyur
Srirangam
Old Pal Pannai
Sangiliyandapuram
Capital Value
(INR/sq.ft)
2,099
2,500
4,000
3,900
3,650
3,800
Unit Size Range
(sq.ft)
585 - 613
763
650
637
736
657 - 827
Ticket size
(INR)
1,227,915 -
1,286,687
1,907,500
2,600,000
2,484,300
2,686,400
1,839,600 -
3,142,600
AFFORDABLE HOUSING IN TAMIL NADU
4746 Knight Frank Advisory Services
CITY OVERVIEW – ERODE
INTRODUCTION
Erode located alongside Kaveri River is the seventh largest
urban centers in Tamil Nadu. Erode has a hilly terrain with
undulant topography. The district spreads across 5,760
sq.km with the population of 2.3 mn. Rapid increase in
economic and industrial activities, population and per capita
income had compelled Erode Municipal Corporation to
include municipalities, town panchayats and village
panchayat to its jurisdiction. Manufacturing of handloom and
textile products are the major economic activities in the city
followed by production of turmeric. Both residential
apartments and villas are preferred in this city. Majority of the
existing apartment developments are witnessed in the
outskirts of the city with predominantly S+4 structure.
DEMOGRAPHIC PROFILE
The population of Erode has grown from 2.0 mn in 2001 to
2.3 mn in 2011. The table below shows the population trend
in the past.
Majority of the urban households in Erode fall under SEC D &
E constituting of unskilled working population.
Year
1991
2001
2011
2017E
Source: Census 2011
Population (no.)
1,802,939
2,016,582
2,251,744
2,405,808
Decadal Growth (%)
11.85
11.66
6.84
CONNECTIVITY
Source: Open Street Maps
There are six state highways and two district roads passing through the central part of the city which connect Erode with
other parts of Tamil Nadu.
• Erode – Bhavani Road (SH – 20) which connects NH-47 running parallel to Cauvery River
• Erode – Sathyamangalam Road (SH –15) which connects with Gobichettypalayam and Sathayamangalam in the north
• Erode – Nasiyanur – Thingalur Road (SH- 173) leading to Nasiyanur and further leading to Thingalore in the west
• Erode – Perundurai Road(SH – 96) which connects Perundurai in south west direction and further connects with
Coimbatore
• Other district roads – Chenaimalai road, Erode – Arachalur – Kangeyan Road, Erode – Karur Road, Erode – Shivagiri Road
Major roads for intra city movement are Bhavani Road, Brough road, E.V.Nanjappa (Mettur) road, Gandhiji Road, KNK Road
and RKV Road.
INFRASTRUCTURE INITIATIVES
• Proposed development of 110 kms of arterial roads
including a Circular Ring Road and Satellite Ring Road
• Proposed grade separators, 3 bridges and 28 intersection
improvements at various locations
• Proposed public transit corridors along Karur road,
Perundurai road, Bhavani road and Chithode road
• Proposed bus terminus in Solarpudur to reduce the
congestion in central bus terminus
AFFORDABLE HOUSING IN TAMIL NADU
4948 Knight Frank Advisory Services
RESIDENTIAL MARKET OVERVIEW
Thindal
Being located at a proximity to Erode Junction and central
bus terminus, Thindal has become one of the well-known
residential markets in Erode. Due to number of educational
institutes stationed in this micro market and relatively lower
capital values, demand from end users to acquire a
residential property in this location has been increasing. As
per the market survey, absorption level in this location for
residential apartments are higher than the other micro
markets in Erode.
INCOME SEGMENT ANALYSIS
Based on Indicus data 2013 – 2014, more than half of the
urban households come under EWS segment having annual
household income of less than INR 3 lakhs. This segment
forms the primary target for affordable housing developments
in the region.
Solarpudur
Solar is one of the developing residential micro-markets
located 6 km away from Erode Junction. A new mofussil bus
terminus has been proposed in this location to reduce
congestion in central bus terminus which has increased the
capital values in this micro market.
Teachers Colony
Teachers colony located in proximity to CBD is one of the
prime residential locations in Erode. Supply of recent
residential developments is minimal in the micro market due
to limited availability of land parcel and higher capital values.
IDENTIFYING CURRENT AFFORDABILITY
SELECT AFFORDABLE PROJECTS
Source: Knight Frank Research
AFFORDABLE HOUSING IN TAMIL NADU
5150 Knight Frank Advisory Services
CITY OVERVIEW – TIRUPPUR
INTRODUCTION
Tiruppur located along the Noyyal River is the fifth largest
urban centers in Tamil Nadu. The district spreads across
5,187 sq.km with a population of 2.5 mn. Production and
export of cotton and textile products are the major economic
activities in this city. It contributes about 90% of total cotton
knit wear exports from India. To support the textile industries,
special industrial parks were developed to aid the production
and export of apparels. Residential apartment developments
in the city including projects by renowned developers have
witnessed slow absorption. However, a few projects in the
city limits have been witnessing demand primarily from the
migrant population from Coimbatore.
DEMOGRAPHIC PROFILE
The population of Tiruppur has grown from 1.9 mn in 2001 to
2.5 mn in 2011. The table shows the population trend in the
past.
Majority of the urban households in Tiruppur fall under SEC D
& E constituting of unskilled working population
Year
1991
2001
2011
2017E
Source: Census 2011
Population (no.)
1,531,983
1,920,154
2,479,052
2,889,717
Decadal Growth (%)
11.85
11.66
16.84
CONNECTIVITY
Source: Open Street Maps
Tiruppur is well connected to prominent places in and around the district via National and State Highways:
• NH - 47 which connects Avinashi
• NH – 67 which connect Kangeyam and Palladam
• NH – 209 which connects Udumalpet
Tiruppur Railway Junction is the closest rail network facilitating Avinashi, Palladam and Kangeyam Taluks. Coimbatore Airport
located at a distance of 45 km is the nearest airport from Tiruppur.
RESIDENTIAL MARKET OVERVIEW
Major residential markets in Tiruppur are Rayapuram, KPN colony, Odakaadu located at Avinashi road and off Kangeyam road.
Development of residential apartment in this city is limited as the buyers' preferences are inclined towards villas and individual
bungalows. There are a few residential group housing projects within the city limit which has better absorption level driven by
the migrants from Coimbatore. Rayapuram and Odakaadu micro markets have witnessed residential group housing
development in recent years.
AFFORDABLE HOUSING IN TAMIL NADU
5352 Knight Frank Advisory Services
INCOME SEGMENT ANALYSIS
Based on Indicus data 2013 – 2014, more than half of the
urban households come under EWS segment having annual
household income of less than INR 3 lakhs. This segment
forms the primary target for affordable housing developments
in the region.
IDENTIFYING CURRENT AFFORDABILITY
SELECT AFFORDABLE PROJECTS
Source: Knight Frank Research
AFFORDABLE HOUSING IN TAMIL NADU
5554 Knight Frank Advisory Services
CITY OVERVIEW – SALEM
INTRODUCTION
Salem is the fifth largest urban centers in Tamil Nadu. The
district spreads across 5,273 sq.km with a population of 3.5
mn. Steel manufacturing is the major economic activity in the
city followed by production of silk products. Salem has an
integrated steel plant which is a part of Steel Authority of
India
DEMOGRAPHIC PROFILE
The population of Salem has grown from 3.0 mn in 2001 to
3.5 mn in 2011. The table shows the population trend in the
past.
Majority of the urban households in Salem fall under SEC D &
E constituting of unskilled working population.
Year
1991
2001
2011
2017E
Source: Census 2011
Population (no.)
2,573,667
3,016,346
3,482,056
3,795,321
Decadal Growth (%)
17.20
15.44
8.99
CONNECTIVITY
Source: Open Street Maps
INCOME SEGMENT ANALYSIS
Based on Indicus data 2013 – 2014, majority of the urban
households come under EWS segment having annual
household income of less than INR 3 lakhs and LIG segment
having annual household income in the range of 3 to 5 lakhs.
This segment forms the primary target for affordable housing
developments in the region.
IDENTIFYING CURRENT AFFORDABILITY
SELECT AFFORDABLE PROJECTS
Source: Knight Frank Research
AFFORDABLE HOUSING IN TAMIL NADU
5756 Knight Frank Advisory Services
CITY OVERVIEW – TIRUNELVELI
INTRODUCTION
Tirunelveli is located along the banks of Tamaraibharani River
in the west. It is the sixth largest municipal corporation in
Tamil Nadu. The district spreads across 6,693 sq.km with a
population of 3.1 mn. Educational institutes, food processing
and agro-machinery manufacturing and wind power
generation are the major economic activities of the city.
Tirunelvelli is a developing market for residential apartments
as majority of the existing developments comprises villas and
individual bungalows
DEMOGRAPHIC PROFILE
The population of Tirunelveli has grown from 2.7 mn in 2001
to 3.1 mn in 2011. The table shows the population trend in
the past.
Majority of the urban households in Tiruppur fall under SEC D
& E constituting of unskilled working population
Year
1991
2001
2011
2017E
Source: Census 2011
Population (no.)
2,481,880
2,703,492
3,077,233
3,325,842
Decadal Growth (%)
17.20
15.44
8.07
CONNECTIVITY
Source: Open Street Maps
Tirunelveli has a well-connected road network to other parts of Tamil Nadu as well as within the city. NH-7 is the major road
connecting Kollam, Tiruchendur, Rajapalayam, Sankarankovil and Ambasamuthiram.
Tirunelveli junction railway station is the one of the oldest railway stations connecting other districts of Tamil Nadu. Tuticorin
Airport is the nearest Airport to Tirunelveli.
RESIDENTIAL MARKET OVERVIEW
Malapalayam, Reddiyarpatti, Maharaja Nagar and Perumal nagar are the major residential locations of Tirunelveli. Maharaja
Nagar and Perumal Nagar have more number of residential apartments in the city catering to MIG segment. Even though the
capital value in these locations is comparatively low with its competing tier II cities, configuration size developed and
developing in the prime micro markets in the city makes the development unaffordable to LIG segments.
IDENTIFYING CURRENT AFFORDABILITY
SELECT AFFORDABLE PROJECTS
Source: Knight Frank Research
AFFORDABLE HOUSING IN TAMIL NADU
5958 Knight Frank Advisory Services
Salem comprises of six major roads: Omalur Road, Cherry Road, Saradha College Road, Junction Main Road, Yercaud Road
and Attur Road. NH - 44 (Srinagar – Kanyakumari) passes through Salem. NH-544 (Salem – Kochi) and NH- 79 (Salem –
Ulundurpet) originates from Salem.
Intercity road transportation from Salem originates from central bus terminus and Intracity road transportation originates from
old bus terminus.
Salem Railway Junction is located in Suramangalam connecting other districts of Tamil Nadu. Salem Airport is located on
Salem – Bengaluru highway (NH7) at a distance of 9 km from the city center.
RESIDENTIAL MARKET OVERVIEW
Major residential apartments are developed in locations like Yercaud Road, Kannakuruchi, Mullai Nagar and Shivaya Nagar.
Shivaya Nagar is located off Sharadha college road with proximity to Salem Junction. This micro market has considerable
residential apartments within the city limits despite the fact that residential villas and plotted development are the much
preferred developments. 2BHK and 3BHK is the typical development product mix in this location.
Yercaud road is the developing residential stretch in Salem with existing villa projects and upcoming residential group housing
in Adivaram road located off Yercaud road.
INCOME SEGMENT ANALYSIS
Based on Indicus data 2013 – 2014, more than half of the
urban households come under EWS segment having annual
household income of less than INR 3 lakhs. This segment
forms the primary target for affordable housing developments
in the region.
AFFORDABLE HOUSING IN TAMIL NADU
6160 Knight Frank Advisory Services
CONSTRUCTION TECHNOLOGY
RAPID MONOLITHIC DISASTER PROOF
TECHNOLOGY
Rapid Monolithic Construction - The Construction in which,
all building elements including wall, beam and columns are
casted simultaneously which ensures absolutely no joints.
Monolithic construction ensures great surface finish,
durability and earthquake resistant.
This construction technology would require minimum number
of skilled labors with curtailed construction activity. The initial
investment for this technology would be comparatively higher
than the conventional construction methods but ensures
minimal resource consumption, material wastage and
completion timing. RMD Technology – As per “UltraTech
Cement Limited” RMD technology is a game changer in
future as a solution to develop cost effective and sustainable
development
TECHNOLOGY AS SUSTAINABLE
This technology consumes less water, energy, natural
resources and minimal construction/site waste or material
waste which ensures sustainable yet high performance
structures. Monolithic construction also ensures faster
construction phase.
CASE STUDY 1
EWS Housing for Bangalore Development Authority,
Bangalore, Karnataka had developed a Housing development
of G+3 structures using monolithic construction technology.
A brief construction process of the above mentioned
development is represented below
Reinforcement for Superstructure - Walls
Formwork for slab supports
Ready to dispense concrete
Embeded Electrical Circuits
Formwork completed with window opening
Units ready for final finishing
AFFORDABLE HOUSING IN TAMIL NADU
6362 Knight Frank Advisory Services
CASE STUDY 2
Cluster of EWS Houses developed for Karnataka housing
board implemented by Rajiv Gandhi Housing Corporation at
Rajankunte site, Bangalore.
Area of Plinth – 285 sq.ft, single storey
Cost of House – INR.2 Lakhs
Technology – Monolithic construction
Grade of Concrete – M20 dynamic grade for wall & M20 for
roof & foundation
Shuttering – Mivan
CONSTRUCTION TIMELINE
CONSTRUCTION COST
AFFORDABLE HOUSING IN TAMIL NADU
6564 Knight Frank Advisory Services
FINANCING OPTIONS
1. NHB - World Bank – Low Income Housing Finance
Project
The objective of the project is to provide access to
sustainable housing finance for low income households, to
purchase, build or upgrade their dwelling units.
The Proposed project has three components:
• The First component is financial support to build capacity
of the NHB, qualified intermediary institutions and
qualified primary lending institutions by building new
financial products, loan standards, risk management
tools, financial literacy and consumer protection capacity.
• The Second component is the financial support for
sustainable and affordable housing. This component will
finance NHB to refinance, directly or indirectly through
qualified intermediary institutions, low income housing
loans by qualified primary lending institutes to primary
borrowers to purchase, build or upgrade their dwelling
unit. This component will aid the secured low income
housing loans to borrowers with formal and informal
incomes.
• The Third component is project implementation. A Project
Implementation Unit will be set up within NHB to help
implement the project, carry out monitoring and
evaluation, be responsible for legal and grievance
redressal and monitoring social and environmental due
diligence.
2. Refinance Scheme for Construction Finance for
Affordable Housing
NHB aims to aid the market supply for affordable housing by
concessional finance assistance to developers to develop
affordable projects through scheduled commercial banks and
Housing finance companies.
Eligibility Criteria for Implementing Agencies
• Public agencies viz. Housing Boards, Development
Authorities, Slum Improvement / Clearance Board,
Improvement Trust etc.
• Private Developers/Builders etc. conforming to the
following criteria :
– Developers / builders undertaking low cost affordable
housing projects should be a company registered
under the Companies Act, 1956
– Such developers / builders should have minimum 5
years of experience in undertaking residential projects,
and should have good track record in terms of quality
and delivery
– The developers / builders should not have defaulted in
any of their financial commitments to banks / financial
institutions or any other agencies
– The project should not be a matter of litigation
– The project should be in conformity with the
provisions of master plan / development plan of the
area.
– The layout should conform to the land use stipulated
by the town and country planning department for
housing projects
– All necessary clearances from various bodies
including Revenue Department with respect to land
usage / environment clearance, etc. are available on
record
– Long term debt equity ratio of the agency not to
exceed 2:1 as per the latest annual audited accounts
Eligible Projects
The housing projects of the public agencies and of private
developers (either of their own or under PPP model or joint
venture) satisfying the following criteria would be eligible for
NHB's refinance:
• Projects with at least 60% of the permissible FSI for units
of carpet area up to 60 sq.m and cost of the unit (having
carpet area up to 60 sq.m) not exceeding 30 lakhs per
unit; OR
• Projects having at least 60% of total number of dwelling
units earmarked for units having carpet area up to 60
sq.m and cost of each such unit not exceeding 30 lakh.
OR
• Slum improvement / rehabilitation projects conforming to
the parameters to be set by the Central Sanctioning and
Monitoring Committee of the Affordable Housing in
Partnership Scheme (AHP) constituted under the
Chairmanship of Secretary, HUPA
• Promoter's contribution - minimum 20% of project outlay
(applicable to private agencies)
• Minimum asset coverage of 1.33:1 based on market/
book value of the project whichever is lower; as certified
by a valuer (applicable to private agencies).
AFFORDABLE HOUSING – KEY PARAMETERS
The lack of available housing option in the market, coupled
with minimal income households and minimal access to
housing finance truly impacts the LIG/EWS sectors radically,
hence in order to cater those segments, the following
parameters are to be considered as a paramount importance
while developing an affordable housing projects.
Physical & Social Infrastructure:
In the current market scenario, private developers are forced
to develop an affordable housing project in the urban
periphery due to lack of affordable and adequate land parcel
within the urban centers.
In order to develop a sustainable affordable housing project,
apart from the infrastructure facilities offered with in the
project, the connectivity to urban centers and workplace
destinations should be adequate and feasible.
Adherence of Sustainable/Green development plays a crucial
role in enhancing living quality of the occupants and
performance of the development with respect to resource
consumption.
Financial Literacy:
Majority of the LIG and EWS segment household doesn't
have a formal income proof or document to establish
solvency for securing a housing loan from Housing Finance
Companies.
Financial support and financial literacy is the need of the hour
for these segments, however certain Housing finance
companies in the market have started a new Home loan
products to finance such borrowers with a risk premium on
the market lending rate.
Cost of Ownership:
Regardless of the financial support to LIG/EWS segment in
the market, willingness to own a property for a buyer from
these segments is least due to the following reasons
• Additional cost attached to the unit such as VAT, Service
Tax, Stamp duty, registration and other cost which
constitutes approximately around 15% to 25% of the
home cost
• Lack of public transit systems to peri-urban areas which
are likely to be the affordable housing catchments
© Knight Frank India Pvt . Ltd.
Praveen SubramanyaAssociate Director, Valuation & [email protected]
VALUATION & ADVISORY
For the latest news, views and analysisof the commercial property market, visitknightfrankblog.com/commercial-briefing/
COMMERCIAL BRIEFING
This report is published for general information only and not to be relied upon in anyway. Although high standards have been used in the preparation of the information analysis, views and projections presented in the report, no responsibility or liability whatsoever can be accepted by Knight Frank for any loss or damage resultant from any use of, reliance on or reference to the contents of this document.As a general report this material does not necessarily represent the view of Knight Frank in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank to the form and content within which it appears.
For the latest news, views and analysisof the commercial property market, visitknightfrankblog.com/commercial-briefing/
COMMERCIAL BRIEFING
CIN No. – U74140MH1995PTC093179
INDIA WAREHOUSINGMARKET REPORT 2018
INDIA REAL ESTATEJUL - DEC 2017
INTERNATIONAL VIEW
RECENT MARKET-LEADING RESEARCH PUBLICATIONS
Kanchana KrishnanBranch Director - [email protected]
THE WEALTH REPORT2018
www.knightfrank.com
Knight Frank India research provides development and strategic advisory to a wide range of clients worldwide. We regularly produce detailed and informative research reports which provide valuable insights on the real estate market. Our strength lies in analysing existing trends and predicting future trends in the real estate sector from the data collected through market surveys and interactions with real estate agents, developers, funds and other stakeholders.
Girish ShahExecutive DirectorMarketing & Corporate [email protected]
PRESS OFFICE
KNIGHT FRANK INDIA (P) LTD
Sunny Side, 1st Floor, Centre BlockNo. 8/17, Shafee Mohammed RoadNungambakkam, Chennai 600006, India