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Karnataka, India

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Housing for 'The Aam Admi'

By - Magnum

Real estate plays an important role in the growth of Indian economy. This sector happens to be the second largest employer after agriculture and is expected to grow at the rate of 30 per cent over the next decade. Growth prospects and price stability of smaller cities are attracting large real estate developers in such cities in the recent past, according to a report titled 'Real(i)ty Next: Beyond the Top 10 Cities of India', released by Crisil. The report estimates that the sale of new residential apartments in 10 such smaller cities are at around US$ 4 billion in 2012. Strong demographic mix and increasing salary levels will be the key triggers for growth of the residential market in 2013-14. According to CRISIL Research, housing shortage in urban areas will continue to rise owing to migration towards urban areas and increasing trend of nuclear families. Housing shortage in urban areas is estimated at 19.3 million units at the end of 2008, up from 15.1 million units at the start of 2005. Housing shortage in urban areas is likely to touch a walloping 21.7 million units by the end of 2014. With RBI not so liberal with banks' purse strings, project viability suffers. In such a scenario, affordable housing funding should be made separate from real estate funding. As a first step in easing of funding routes for the real estate sector, categorisation between the mass/affordable housing and other housing projects should be done immediately. Easy and available funding free of bottlenecks for such projects will be a life saver for this sector that is struggling to sustain let alone grow. For Public Private Partnership goals to be met as envisioned in NUHHP in 2007, a major stimulus is required. Funding from the financial institutions should be separated and given a preferred financing option. Though banks have increased funds but the bank credit is still expensive and can only be a limited source of funding for risky projects. Another factor to promote viability of afforda