Transcript Construction Finance

CONSTRUCTION FINANCE: LENDERS PERSPECTIVE
Lower and Middle Income Segment
India - Preview
Total Population of India-1.5 billion
India - Preview
Population (million)
Economic Classification
Annual Household
Income (in US$)*
2
9
20
9
17
33
Rich
(Above 115,000)
High Income
(57,000–115,000)
48
74
120
221
285
404
Working class
(10,200–23,000)
726
710
613
Needy (Below 10,200)
2001-02
* In PPP terms
2005-06
2009-10(E)
Need for ‘Affordable Housing’
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Huge gap between demand & supply
Developer focus on Higher Income Groups in Urban
areas with higher margins.
Un-regulated/Un-authorised/ Un-planned housing units
for the lower and middle income group
Inadequate infrastructure & basic amenities in Low-cost
projects/ units
Inadequate access to affordable finance to the lower
and middle income segment
The ‘Rural Story’…
Migration from rural to urban areas
 Attractive
employment opportunities
 Increase in family size
 Poor availability of basic amenities for education,
medical facilities, entertainment, lifestyle etc.
 Aspirations for upward economic mobility
 Significant “short haul” migration to smaller towns
by persons moving to non-agricultural employment
Opportunities…
Opportunities for developers and Lenders
 Significant
opportunities in tier II & III locations
 Large untapped demand for affordable housing
 Lower land cost and relatively stable prices
 Adequate
 Good
margins available to both
demand for well developed “basic” layouts
in Gram panchayat areas abutting small towns
 Lower risks as purchasers are end users not
speculators or investors
Opportunities…
Opportunities for developers and Lenders
 “Sell
and build” model for small units as opposed
to “build and sell” lowers project selling risk
 Lower project cost disperses lenders risks & lowers
barriers to entry for smaller builders/developers
 “Local” developers more in tune with local market
 “Local”
market fairly insulated from global swings
 Remittances from larger urban centers create
upgrade demand for family homes
Our Initiatives in affordable housing
Financing “Self” Construction on owned land
“Plot Loans” with construction finance
Ready Unit finance
Finance for layout development & construction
Project finance for apartment construction
Project finance for mass affordable housing
DHFL Property Services
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Tie-ups with various developers in tier II and III locations
for project cost management and sales
Provide technical and legal support
Introduce technologies to reduce cost and time of
construction
Help create proper amenities like roads, schools,
hospitals, playground, clean drinking water, drainage
etc.
Recommendations
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‘Mass Housing Scheme’ in the MIG and the LIG
segments like MHADA and DDA initiatives with
private developers for larger towns
Increasing availability of affordable housing close
to workplace by regulating land use in newly
developing townships & redevelopments
Support for infrastructure development in smaller
towns and rural locations
Recommendations
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Government subsidies and tax exemptions to
developers and HFC’s in tier II & III locations
Provision of housing finance at a lower interest to
individuals in the Low and middle income segment
Refinance from NHB to HFC’s to promote larger
affordable housing schemes in urban and rural
locations
Thank You
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