Affordable housing offers 6.42L-cr funding opportunities in 5 years

Hyderabad: India's affordable housing will offer Rs 6.42 lakh crore ($ 0.62 trillion) worth of funding opportunities for private funds in the backdrop of the government's push for this segment, says a report. The affordable housing sector in the country has witnessed private equity (PE) investments to the tune of $2,597 million since 2011, as per the report by real estate consultancy Knight Frank.

In its latest report "Brick by Brick – Long term capital to fund affordable housing for all", Knight Frank said the investment in affordable housing has been 17 per cent of the total PE investment in the residential segment in India in the last 10 years (since 2011). However, it is yet to become a major theme for the funds in the country with a very few PE funds dedicated to funding affordable homes.

The report was launched during the ongoing APREA - Asia Pacific Real Estate Leaders Congress 2021 currently being held (November 22 – 26, 2021) during the session - Affordable Housing - Long Term investment. The Ministry of Housing and Urban Affairs demand based assessment of the number of houses has pegged the affordable housing demand at 11.22 million houses.

Urban India comprises 35 per cent of the country's population and is witnessing unprecedented rates of migration leading to rapid urbanisation resulting in demand preceding the supply. It's estimated that by the year 2030, more than 40 per cent of the population will live in urban areas. This will create additional demand for affordable units with huge investment opportunities for PE players. Gulam Zia, Senior Executive Director – Research, Advisory, Infrastructure and Valuation, Knight Frank India said, "The PE investments into affordable homes increased since the introduction of reforms in the sector. The presence of a few large funds dedicated to financing the affordable housing projects signifies the potential of the segment."

However, a significant portion of this investment into affordable housing segments is in projects for the mid-income segment and very little has been invested in constructing of the EWS and LIG segments, where the actual housing shortfall is.