A 30-Sqm Apartment In Mumbai May Cost You Rs 1 Cr

Believe it when some of the studies from leading research companies put Mumbai on the map of most expensive real estate cities across the world. And rightly so. In this year's Budget Speech, Finance Minister Arun Jaitley defined an affordable housing for Tier-I cities such as Mumbai as being 30 sq m (approx. 300 sq ft) .

Also read: What Is Common Between Mumbai And Sydney Real Estate?

Now, sample this. The cost of a 300-sq-ft unit where per sq ft value is Rs 20,000-40,000 per sq ft, would bring the total price of the unit in the range of Rs 80-90 lakh, including the extra charges that a buyer needs to pay other than property value. Is this unfair? PropGuide gives you the overview:

Defining affordable housing, but how?

In a city like Mumbai where finding a budget property is a daunting task, affordable housing projects are rarely seen in the maximum city and the Greater Mumbai region. Few developers have raised the voice to match the definition of metro cities with rest of India. According to the notification of Union Ministry of Finance, Department of Economic Affairs, affordable housing is defined as a housing project that uses at least 50 per cent of the floor space index (FSI) for dwelling units with a carpet area of not more than 60 sq m. This is for the entire country barring the four metro cities.

Also read: What Constitutes Affordable Housing?

"We should have all stakeholders in the residential housing segment coming together to raise a voice to remove this difference. We want that Mumbai, too, gets the affordable housing definition of dwelling units with a carpet area of not more than 60 sq metres,” says Niranjan Hiranandani - President -Naredco West.

Few stakeholders have raised their voice to redefine the norms of affordable housing based on the annual income rather than on unit size as this will bring more objectivity. "The ideal definition of an affordable home should then incorporate not just the unit size, but also include the value of the dwelling, as well as the propensity of the buyer to make a purchase. For a low-income group (LIG) buyer (defined as per the Housing and Urban Poverty Alleviation Ministry 2012 description as earning between Rs 1-2 lakh annually) , purchasing a home at Rs 50 lakh is not necessarily 'affordable'," says Shubika Bilkha, Business Head at The Real Estate Management Institute (REMI) .

Will affordable housing mean living on the fringes?

Going by the buyer's perspective, it is being projected that affordable housing would always mean a small home on the outskirts. The buyers who are more inclined towards the affordable housing are the middle-income salaried group that is dependent on rentals and want to have a property of their own in proximity to their workplaces. Though income is not a major criterion as banks now days are readily offering funds, however, poor and time-taking connectivity to the commercial districts would serve no purpose; only the productivity will go down.

Also read: Looking For A Property Under Rs 25 Lakh In Mumbai? Head To These Localities

"Due to the lower-income segments and the limited availability of land in urban India most affordable housing projects are located at a significant distance from the city. The government should support real estate developers in acquiring land parcels close to the city," says Dharmesh Jain, CMD Nirmal, President MCHI.

How can affordable housing be really affordable?

PropGuide reached out to various industry experts to discuss how affordable housing can be really feasible for the common man. Here are a few insights that emerged:

"Private sector real estate developers should work in sync with the government. The government and the private sector real estate developers will need to work together to create townships and Smart Cities which will encompass the target of affordable homes," says Hiranandani.

More focus on redevelopment projects. "There are lot of ongoing re-development projects that are great for the city as well as the people. These projects would add the supply of new homes," adds Jain.

"The availability of land at more economical rates has resulted in the growth of affordable housing developments towards the peripheral rim and beyond. The limited availability of land in urban centres at economical prices remains a challenge for the developers," adds Bilkha.