Affordability on Mumbai's Central Railway Corridor

Residential Apartment Affordability on Mumbai's Central Railway Corridor between 2008 vs 2014 is as shown below.

Rise in property prices has forced home buyers to move to suburbs which fits their income profile.

• A budget of Rs.132 laths could buy property in Sion(E) in 2008, but only in Bhandup(W) in 2014
• Family with pre-tax income of Rs 8 lakh can buy a house in suburbs like Ambarnath /Badlapur and Titwala
• Ambivali has seen the highest Rise while Kurla (W) has registered the Lowest.

Affordability On Mumbai's Western Railway Corridor

Residential Apartment Affordability in the Western Railway Corridor in Mumbai Metropolitan Area between 2008 Vs 2014 is as shown below.

Rise in property prices has forced home buyers to move to suburbs which fits their income profile, For Example, a budget of Rs.66 lakhs could buy property in Malad (W) in 2008, but only in Vasai (W) in 2014 • Family with pre-tax income of Rs 10 lakh can buy a house in suburbs like Vasai-Virar
• Bandra (W) has seen the highest price rise while Jogeshwari (W) has seen the lowest rise

Affordable housing norms eased significantly

The Government of India headed by the most able Prime Minister of Independent India, Shri Narendra Modi notified amendments to “Consolidated FDI Policy Circular 2014” inline with announcement made in Oct’14. Key revision from the Oct’14 announcement lies in the Affordable housing (AH) qualification criteria which has been eased significantly.

The amended norms provide for no restriction on capital and size if a project has 30% of cost in AH segment. Projects which have to qualify for AH have to use 1) at least 40% (reduced from 60% in Oct’14 announcement) of the FSI for dwelling units of Floor Area <140 sq mts (increased from 60 sq mts carpet area); and 2) 25% of the total number of dwelling units (reduced from 35%) constructed should be of floor area <60 sq mts (increased from 21-27 sq mts in Oct announcement).
The relaxation of qualification norms for AH significantly increases the ambit of FDI investment in the sector. Removal of FDI restriction, in addition to RBI incentives for AH segment (allowing banks to raise long term bonds); will reduce the cost of funding for developers undertaking affordable housing projects

However for AH concept to become a reality across country we need to see improvement in clearance process (reduce timeline of approvals), incentives to builders (extra FSI, higher low cost land availability), and incentives to customers (interest rate, stamp duty subsidy) inorder to improve the viability of the projects.

GoI has clarified that 100% FDI under automatic route is permitted in projects for operations and maintenance of townships, malls/shopping complexes and business centers. However we have limited clarity if this can be interpreted as FDI investment in completed assets or just for undertaking operations and maintenance activities in these projects

GoI has removed the condition of minimum 3 years lock-in (subject to completion of trunk infrastructure) while allowing the exit after completion of project. Inclusion of exit on completion clause helps shorter execution tenure projects (affordable housing projects).