Rental housing is the future of mega-cities

News Posted - 2010-04-07

Chief minister Ashok Chavan’s grand Mega City project in Panvel with an energy city, MITTIC; IT/telecom commercial office centre; and entertainment city, will also have a rental housing project for the 2.5 lakh people working there.

Mumbai Metropolitan Region development authority (MMRDA) will be the planning authority on this project, in which it will hold equity stake. MMRDA has offered an FSI of 4 to developers for building the housing project. SVR Srinivasan, additional metropolitan commissioner, said, “We will be strategic partners and will set up a growth centre jointly with 50-50 partnership.”

Chavan said, “The necessary FSI will be provided so that investment can be speeded up. The project will provide 1.4 lakh residences to people after completion of the project.”

The Mega City project has attracted one of Maharashtra’s largest Foreign Direct investments – Rs45,500 crore – from Gulf Finance House (GFH). Though investors like Abu Dhabi Investment Bank, State of Kuwait, and others are investing, GFH is looking at raising money from India as well, says Esam Janahi, of GFH.

“In the first phase, $1 billion will be invested and we expect the project to be completed in five years Around $3-4 billion will be invested in the entertainment city,” said Mathew James, chief operating officer, Abu Dhabi Investment House.

Source: DNA 7/4/10

‘Rental housing is the future of mega-cities’

The future of the virtual mess that we call urban housing in the city lies in rental housing, akin to those coming up in special economic zones. With cities taking mega proportions, readying to out¬strip” the nation-state, it is time we concentrated on our urban conundrum, said economist Dr Abhav Pethe at the Seventh Professor L B Kenny Endowment Lecture.

Stating that the one-price principle could not be applied with abandon in cities like Mumbai, Pethe said, “Although it is a fair practice in other countries, here, in view of the low FSI it often leads to an artificial scarcity and allows room for manipulation. These are nothing but invitations for corruption,”

About the veritable mess the lopsided development has resulted in the city, the economist reminded that successful cities have managed to balance sources of capital with available resources. Squarely blaming the deadlock between NGO lobby entrenched in the development debate and builders as well as the ill-defined property rights in the city, Pethe said.

“Affordable housing depends on the land’s quantum and value, wherein the livelihood of the people being housed and their organic relation with the former must be taken into account.”

In fact, it is difficult to define affordability in terms similar to those in the west. “If we assume that an average flat costs Rs 10 lakh, then those who can afford it must be earning a minimum of Rs 47,000 a month, However, this leaves out nearly 99 per cent of the catchment population. Conversely, iii one were to provide affordable housing to say 70 per cent of the population, the cost of each house would have to be a measely Rs one lakh ten thousand.”

Therefore, arguing against the one-price principle, Pethe said it was anti-poor. However, rental housing schemes with due regard to the land value and the setting up of efficient transport facilities are ways out of the urban conundrum. “In mega-cities like Mumbai, time is, and will be, of value, and a rental housing scheme will be good governance along with an overlapping jurisdiction of various development activities and a decentralised Union policy on housing is the way to go,” he concluded.

Source: The Free Press Journal