Housing for the urban poor in India has failed to keep up with rapid urbanisation. This has led to low-income families living in cramped, sub-standard and often rented accommodations with limited access to civic amenities. The Government estimates a shortage of more than 18 million homes, of which 95% are in the EWS (households with annual income of less than INR 1 lakh) and LIG (households with annual income of INR 1-2 lakhs) segments with families at the top end of these segments earning up to INR 16,000 per month. Many of these EWS and LIG families cannot afford privately built housing unless the Government provides some subsidy. However, there is a large proportion of low-income urban families, with a monthly household income of INR 10,000 – 25,000, who can afford privately built formal housing costing INR 4 – 10 lakh with the assistance of a housing loan but without any aid from the Government. There is an estimated need of 15 million homes for these low-income customers, an opportunity of INR ~9 lakh crore for developers and INR ~7 lakh crore for housing finance companies.

Monitor Inclusive Markets, over the last few years, has been working to make the market for Low-income housingin urban India. This housing is built by private developers on land purchased by them and is priced between INR 4-10 lakhs. The product mix in such projects typically consists of small units – 1 room kitchen, 1 bedroom hall kitchen – of sizes between 250-400 square feet. Low-income housing is targeted at urban poor and is affordable for customers that have a monthly household income of anywhere between INR 10,000-25,000. Today, nearly 80,000 such houses have been launched across the country by private developers and there is an opportunity to do millions.

This is a case that highlights the potential of private sector role in solving the huge need of low-income housing for urban poor in India. The case also examines the developer business model of low-income housing in great detail. The case relies heavily on the years of cutting-edge research by Monitor Inclusive Markets (MIM) on the subject of low-income housing.

About the Case Author
The case has been authored by Aditya Agarwal (working in consulting capacity at MIM) and Anand Raj (Senior Consultant) of Monitor Inclusive Markets. Vikram Jain (Senior Manager and Housing Practice Lead), Nidhi Hegde (Manager) and Ashish Karamchandani (Executive Director and Founder of MIM) provided their valuable guidance to effort.