| Property and Non Bank Financials Housing for all identified as a key thrust area by Urban Development Ministry | ||
The Urban Development Minister, in one of his first interviews, has marked “Housing for All” as a key priority, and to bring down rates of housing finance as an area of immediate focus. Given the current high level of interest rates it might be difficult to achieve this unless some special regulatory dispensation is given (additional reduced risk weights/ provisioning) apart from improved coordination across ministries. LICHF (OW), Prestige Estates (OW), JPIN (N), HDIL (UW) and Puravankara (Not Covered) are some of the key participants in the low cost housing space and any focused measure by the government could be positive over the medium term.
· Affordable housing is far more than just lower interest rates: Our interactions with various industry participants have indicated that lower mortgage rates alone might not improve affordable housing stocks. Faster approvals and higher FAR (Indian cities have low FSIs) and lower financing costs will be required. A lot of the developers have been stuck in the past on account of cost inflation / project delays in such projects and hence the propensity to do so many might not be there just yet unless some regulatory sops are given.
· Experiment has been successful only in a few cities: India’s urbanization has been haphazard with infrastructure not matching the pace of urban population growth. Except for a few satellite towns like Gurgaon / Noida and parts of Bangalore, many states have not been able to deal with it effectively. The 100 smart city project of the government is a step in the right direction here but implementation remains the key.
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