Propping up property
Please tell us a little more in detail about Mahindra Lifespaces’ plans for affordable housing.
We started looking at this space around three years back. The housing deficit figure which stands at around 19 million is set to double to 38 million by 2030. Around 590 million Indians would live in cities by 2030. About 70% of the net new employment would be generated in these cities. Thus this rapid urbanisation is something which will continue to happen and if not tackled in a planned manner lend itself for an unplanned growth with illegal and compromised housing solutions also coming up. More than one-third of the urban Indians don’t own a home. Most developers focus on supplying products for the top 5% of the population by income including us thereby leaving a large underserved market at the urban bottom of the pyramid. We saw this as a big opportunity to seize. We are happy today that we have launched our affordable housing vertical Happinest and under this brand launched our first project Happinest – Avadi, in the fastest growing western suburb of Chennai. Prices start at Rs 9.9 lakh for a 1BHK flat aimed at families with combined family income of Rs 20,000 to Rs 40,000 per month. The development is spread across 13.22 acres of land and is offering a mix of 1BHK and 2BHK flats. It would be home to more than 1,200 families along with commercial shops for meeting the daily needs of residents. We would be launching our second project in Boisar near Mumbai soon.
What are some of the challenges faced by you to create affordable housing?
The business model rests on “low margin-high volume with quick turnaround” principle which if achieved is capable of giving a return on capital employed that is higher than the conventional real estate developments. Thus some of key success criteria are:-
Right location with good connectivity to the city centre/workplace
Low land cost
Time bound approvals
Quick execution with a manufacturing mind-set
For private developers to significantly participate in this space and thereby contributing increasing supplies of affordable housing, we strongly feel that enabling policies and environment is the need of the hour. To promote affordable housing more developers need to participate in this space which can happen only when developers believe that there is a win-win situation for all stakeholders. Some of the steps which we think would help see more participation from developers in this space are:
Time bound single window clearances (approvals within three months)
Create affordable housing and technology zones which will not only help in increasing land supplies but also promote technologies like pre-cast. These technologies can only thrive if requirement is standardised and in mass quantity, leading to quicker turnarounds. This will lead to lower cost of ownership for the end users
A separate development control regulation for affordable housing which will take a look at some of norms on setback, parking, lifts and FSI
Customers are paying service tax, VAT and stamp duty that will add to the cost of the end product. These can be surely looked at with an aim of reducing the cost of ownership for the end user. For instance, the government of Rajasthan charges a flat sum of Rs 100 per unit on account of stamp duty in affordable housing projects.
What are some of the innovative materials used for faster development as you have said that projects would be ready in nine months’ time?
Innovation in design was one of the key focus areas for Happinest – Avadi project. The aim was to reduce turnaround time and lower costs. Architects and structural designers have collaborated extensively with IIT (Madras) to validate a cost effective and innovative foundation with a hybrid construction technology solution to enable speed without compromising on quality. Ready-to-fit components are used thereby reducing on-site work and quality variation to enable faster delivery to customers.
Some examples of innovation in design are:
FRP encased CLC door frames: We wanted to provide a door frame that would delight the customer yet be light-weight, ready-to-use and maintenance-free. All this should be achieved without compromising on the specifications with respect to strength, durability and fire safety. The solution for the same is a cellular light weight concrete (CLC) door frame encased with fibre reinforced polymer (FRP). This is an environmentally-friendly product as it completely replaces wooden frames used in conventional construction. A patent has been registered by Mahindra Lifespaces for this product.
Ready-to-fit balcony railing: A balcony is a necessary and important functional extension of a small home. In Happinest – Avadi, balconies are designed to reduce the construction time unlike conventional methods. We have designed an enclosing structure which intercepts the external weather. It is light weight and minimally connected to the building face so that it releases the heat it intercepts to the surrounding air and does not conduct the heat to the building. Prefabrication technology is adopted and components are assembled at fixing point similar to an assembly line in a car factory. The structure is made of pre-fabricated mild steel (MS) and fibre cement board component. To ensure uniformity of the design, we have used water-jet technology to cut the cement board. These fibre cement boards are assembled with to the mild steel angle frame at the site yard and assembled railings are easily fixed to balcony by nut-bolts. A patent has registered by Mahindra Lifespaces for this product.
Ready-to-fit chajjas: Chajjas or overhanging eaves essentially provide a two-pronged protection to the window. Firstly they provide protection from tropical sun leading to reduction of heat ingress. Secondly, it prevents the rainwater from entering the house during the monsoon season. At the Avadi Project, we have used ready-to-fit chajjas similar to the balcony railings. They is directly fabricated at site and fixed above windows by nut-bolt method.
You have tied up with Mahindra Finance and Muthoot. Could you offer a little more details about the nature of these tie-ups?
Financial inclusion and thereby providing 360o solutions to the end users is the key to success of such a project. We realised that almost half the people in our target segment are working in the informal sector and hence do not have a documented proof of income. As a result, it is difficult for them to get loans from banks. Less than 20% of the people in the target segment have availed loan from an organised channel. Thus financial literacy is very important. To ensure that we facilitate this segment we have tied up with HFCs. There is a two stage engagement. First, we encouraged the HFCs to educate their existing customers about the project and to get them to the site. Secondly, those customers who walk into our sales office can interact with representatives of these HFCs for evaluating their loan eligibility.
Considering that the real estate market is seeing tough conditions, what are some of the unique methods you are adopting to sell?
Given the value being delivered in Happinest projects, challenge is not in selling this project but to ensure that the right people buy it. Many of the affordable housing projects tend to get hijacked by investor leading to creation of ghost townships. In addition to the engagement of HFCs we have also initiated Industrial outreach – approaching the employees of industries in the catchment area of the project who earn between Rs 20,000-40,000 per month.