Region (NCR) and Bangalore have been found to be the most unaffordable locations for housing for India's middle-income groups (MIGs). MIGs, defined as households with annual incomes between Rs 9 lakhs to Rs.I0 lakhs are unlikely to find their desired kind of homes anywhere close to the city centre in these three metros, according to a study. On the other hand, Kolkata, Pune and Chennai are seen to offer a good number of affordable locations to MIGs. The study first looks at the factors most important to a consumer in his house buying decision and his budget, and then tries to find locations where these conditions are met.
The Reserve Bank of India (RBI) has made it easier for banks to lend to special economic zones (SEZ). Several types of advances to projects in special economic zones have now been excluded from the definition of commercial real estate loans. Reference to SEZs as commercial real estate loans by RBI in a '06 circular had made it difficult for those involved in these projects to raise funds. Real estate loans are considered risky and categorized as an average, MIGs would have to stay at a distance of 45 km away from the central business district, in areas that have poor connectivity and scant infrastructure, in order to get their ideal affordable home. This is due to the fact that land prices in the city are so steep that even smaller size units of about 600 sq ft that are acceptable to Mumbaikars would not be affordable to MIGs. So buyers will have to settle for places like Panvel, Virar and Kalyan. Similarly, in the NCR, due to the high cost of land, MIGs would have to look beyond Meerut and Sonepat for affordable homes. In Bangalore, MIGs are seen to be highly concerned about part of exposure to sensitive sectors which also include capital markets and commodities. There are also restriction on foreign investment in real estate.
Speaking to ET, LB Singhal, director general, Export Promotion Council for EoUs and SEZs said "We had taken up this issue with the ministry of finance and the ministry of commerce. The matter was before the empowered group of ministers headed by finance minister Pranab Mukherjee, which connectivity to their office. And the problem in Bangalore is that as one starts to move away from the city centre, road and other necessary infrastructure starts to deteriorate. The survey found that MIGs of Bangalore preferred residential units ranging between 850 sq.ft. and 1050 sq.ft. in size. Given this preference for large units, very few locations in Bangalore would be affordable for consumers in the Rs.5 lakhs to Rs.8 lakhs Income bracket.
Affordable locations include Kanakapura Road, Hebbal, Electronic City, BTM Layout and Whitefield, where it would be possible to find units costing between Rs.15 to 30 lakhs. had decided that SEZ should be treated as infrastructure." He added that now with the central bank clarification, loans to those developing, operating and maintaining SEZs as well as setting up or acquiring units in SEZs wiIl be part of infrastructure lending.
"This would enable domestic institutions and banks to make funds available to SEZ sector on the terms and conditions which are applicable for infrastructure lending," he added.