Affordable Housing: A $1 Trillion Investment Basket

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India is witnessing a steady climb in its urbanisation rate and it is estimated that over 40% of Indians will be living in urban areas by 2040. 

Resulting In A Serious Housing Crisis

Yes, India constitutes 11% of the world’s need-for-housing gap, translating to a shortfall of 35 million homes and this gap will only increase over time. 

The Ministry of Housing and Urban Affairs’ demand-based assessment, has pegged the affordable housing demand at approximately 11.22 million houses as on date.

And An Opportunity

Per a recent Knight Frank report, the affordable housing sector today offers funding opportunities of about USD1 trillion, USD0.62 trillion to be precise, for private funds, following the government's special focus on this segment. 

Sample this - 

Of the total private equity (PE) investment in the residential segment in the last 10 years, only 17% has been allotted to the affordable housing category.

However, in the first quarter of 2021, PE investments in affordable housing was up at USD107 million, compared to USD368 million in the residential sector as a whole - a share of 29%. 

Players Move In

To address this housing crisis, various funds and institutes have stepped into the affordable housing segment. 

The largest of these funds is HDFC Capital Advisors (HCARE Fund), which has raised USD1.1 billion, primarily for use in long-term financing of affordable housing projects across 20 cities. 

On-Ground Reports Are Positive

The Pradhan Manti Awas Yojana (PMAY) is to build 11.22 million urban homes by 2022. 

Since the policy was launched in March 31, 2021, 11.3 million houses have been sanctioned and 4.8 million have been built and handed over.

With over 50% of all residential launches across top eight Indian cities in the last five years falling in the sub-INR 50 lakh segment, affordable housing is catching on, just like it needs to.