Knight Frank, India’s leading real estate consultancy, in its latest report ‘Affordable Housing in India: Demand-Supply Assessment and Financing Opportunity’ launched during the CII Conference on Indian Housing Landscape – Affordable to Accessible observes that the existing shortage plus upcoming demand for affordable housing segment in India is estimated to be 30.7 mn units by 2030. The opportunity to finance 30.7 mn units is calculated to be INR 44 tn.
Opportunity to finance demand surge of affordable housing segment by 2030
As per Knight Frank analysis, led by factors such as urbanisation and employment opportunities, 22.2 mn units of housing will be required in urban centres in India. 95.2% of this demand, which is equivalent to 21.1 mn units, will be concentrated in the affordable housing segment. A predominant share of 45.8% of the demand will be concentrated amongst the EWS households.
There is already an existing shortage of 10.1mn units. According to the analysis by Knight Frank India, the cumulative affordable housing demand in India is projected to reach 31.2 mn by 2030, with the market size estimated at INR 67 tn.
The current portfolio of the affordable housing loan market in India is estimated to be INR 13 tn, with Housing Finance Companies (HFCs) constituting INR 6.9 tn and Scheduled Commercial Banks (SCBs) holding a share of INR 6.2 tn. The loan market in this category is anticipated to experience significant expansion due to the escalating potential demand for affordable housing.
The reliance on loans is notably high in the affordable housing segment as compared to premium in India. Based on an assumption of a 77% loan dependency and Loan-to-Value (LTV) ratios applied at various loan thresholds, the potential financing opportunity for banks and Housing Finance Companies (HFCs) in the affordable housing segment is estimated to be INR 45tn.
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