Have Innovation and Entrepreneurship Found Solutions for Affordable Housing?

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ImageThe recently elected government has recently announced an ambitious goal of eliminating slums in India in its most recent five year plan. Will this be a possibility? If you ask the construction companies, the answer is yes. A number of entrepreneurs and enterprises have embarked on new initiatives to provide affordable housing called such as Tata and its construction of Shubh Griha north of Mumbai.

With the increased rate of economic growth over the last few years, housing developers have tended to focus on the higher end luxury developments causing property prices to soar; I was astounded that luxury apartment homes in Mumbai cost the same as they do in New York and London. As demand for these properties have fallen due to the global financial crisis and increased interest rates, the focus on lower cost housing has increased due to a larger market coupled with acute shortages of housing in urban India.

According to the McKinsey consulting company, India’s cities need at least 25 million more homes to fulfill this demand. Since the announcement and the construction of the Shubh Griha project, the recently elected government has announced an ambitious goal to promote a slum-free India within five years which will require a considerable private public partnership. In management expert C.K Prahalad’s book, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits, he argues that there’s a vast untapped market in poor communities and that entrepreneurs have the ability to make profits while improving the lives of the impoverished creating a mutually beneficial relationship. Image

“This is a huge opportunity to serve those at the bottom of the pyramid,” Brotin Banerjee, CEO of Tata Housing, said. “Our inspiration is the millions of Indians who cannot afford proper housing and live in shanties.”

The prices for the Shubh Griha apartments in the Boisar area north of Mumbai will range from Rs.390,000-670,000 ($8000 to $14000) with studio and one bedroom apartments between 280 square feet to 465 square feet respectively. To put things into perspective, while few lived in slums per se in 1980’s Shanghai as authorities allocated apartments almost free of charge, my family and I were allocated 120 square feet for a family of three as housing authorities equitably divided the available living area by the population. Tata says that the Shubh Griha community with have a park, shops, hospital, school, playground, and a community center, also reminding me of the self sufficient communities in China that I grew up in. Since then, a number of other entrepreneurs and construction companies in India have strived to emulate this model.

ImageHow are these homes that affordable? The cost of construction is low because the flats are built outside big cities, where land is much cheaper. The apartments are smaller and lack facilities such as elevators. Owners also have a considerable commute to Mumbai but the Shubh Griha website highlights easy access to public transportation including shuttle service to the train station. Tata chose the first residents who applied through a lottery system just like they did with the Nano with an anticipated completion in two years with plans to expand the model to Delhi and Bangalore.

I think that an increase in public investment in housing as well as private sector motivation will be key in improving the quality of life for the poor, reducing the population and pervasiveness of slums. It’s quite inspiring that Tata and other companies are turning their visionary ideas into reality. What do you think? 


Photos Courtesy of Tata Housing


Joe Qian

External Affairs Officer

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