Govt seeks $3-4 trillion to meet ‘housing for all by 2022’ target: report
A report by KPMG Advisory and Naredco says an overhaul of current funding mechanism might be required to meet the target
Bangalore: An investment of around $3-4 trillion is needed to achieve the government’s vision of housing for all by 2022. To meet this target, an overhaul of the current funding mechanism will likely be required, according to a report by consulting firm KPMG Advisory Services Pvt. Ltd and the National Real Estate Development Council (Naredco) released on Wednesday.
The housing shortage in India is estimated at 19 million units. Of this, about 95.6% is estimated to be from economically weaker sections (EWS) and low-income group (LIG) households, who cannot afford houses costing above ₹ 15 lakh.
While the total investment required for housing development is about $2.3 trillion, occupying the nearly 900,000 urban houses that are lying vacant could reduce this shortfall.
It is estimated that investment of $1 trillion is required between 2011 and 2030 to upgrade and develop suitable urban infrastructure and $500 billion in commercial real estate development.
Thus, the government should target a total investment of about $3-4 trillion by the year 2022 to achieve its vision of ‘housing for all by 2022.’
During a tight liquidity situation in the country, wherein the large equity inflow witnessed between 2006 and 2008 has completely dried up, investments by households have peaked and the government support continues to remain weak, strong measures are urgently required to drive households’ savings, opening up institutional lending and attracting equity capital, along with major structural reforms to drive the real estate sector and economic growth.
“Close to $1 trillion was invested in the real estate sector between FY08 and FY14. Of this, about 72% was met from household savings," the report says.
Funding from private equity (PE) and capital markets, which contributed up to 10% in FY08, has accounted only for 3-4% in the last few years. Banks and housing finance companies have demonstrated strong growth,but it has lagged the overall credit growth, the report said.
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