Tiny Homes to Meet Global Housing Crisis

 

More than 1 billion people around the world lack decent shelter. Of these, the majority live in urban areas, usually in slums and informal settlements (UN-HABITAT).

The world’s megacities – like Mumbai, India, where more than 22 million live in the metropolitan region – have to find a way to provide housing that is both affordable and does the minimum possible amount of harm to the environment.

About one-third of the world’s urban dwellers live in slums, and the United Nations estimates that the number of people living in such conditions will double by 2030 as a result of rapid urbanization in developing countries.

The fast pace of growth of India’s cities presents an enormous challenge: how to house so many people with dignity and to a good standard. India’s city slums are notorious and recently became the subject of the Oscar-winning film Slumdog Millionaire (http://www.slumdogmillionairemovie.co.uk/).

With a population of 1.2 billion, India needs to find 25 million homes a year to meet current demand, according to McKinsey and Co.

Housing prices have risen by 16 percent a year for the past four years. While the middle class – estimated at over 300 million people – has piled into high-end apartments and houses, it has been the country’s low-income people who have been frozen out of the option of quality homes.

The concept of targeting those at the ‘bottom of the pyramid’ (BOP) (http://en.wikipedia.org/wiki/The_Fortune_at_the_Bottom_of_the_Pyramid) has drawn attention to the estimated 23 million poor urban dwellers in India, and 180 million rural families, who have savings and want to own a home. Monitor India (http://www.monitor.com/in/) believes these people have annual earnings between US $1,400 and US $3,000.

The Indian manufacturing powerhouse Tata – which this year launched a BOP-focused car, the Tata Nano – has designed and is building, Nano Homes – small apartments outside Mumbai for US $8,600 (http://tatahousing.in/pages/home.php). It also hopes to expand to other major Indian cities as well.

The Nano homes are built on a modest scale: there are three sizes with the smallest measuring 67 square metres. They consist of a single room that doubles as a bedroom by night with a sink, bath and toilet behind a partition.

Criticisms include location – on the edges of major cities – where residents would have to commute long distances to get to their jobs.

Even so, Nano apartments are so popular buyers are being chosen by lottery.

“India’s housing crisis lies in the fact that the poor in the cities are priced out of the market,” Sundar Burra, an adviser to the Society for the Promotion of Area Resource Centre, a Mumbai-based housing rights organization, told Canada’s Globe and Mail newspaper.

“State supply of housing for the poor is woefully inadequate in relation to the need. Slums proliferate as a solution to this state of affairs.”

People can get a mortgage for the homes from Tata Home Finance.

Tata is not the only company targeting this market. India’s Matheran Realty (http://www.tmcity.in/) is building what it claim is India’s largest affordable housing project, Tanaji Malusare City, in the villages of Shirse and Akurle of Karjat (http://en.wikipedia.org/wiki/Karjat). The 15,000 homes would house 70,000 people and would sell for US $4,698.

Another developer, Godrej Properties (http://www.godrejproperties.com/), is building a BOP housing development outside the city of Ahmedabad with apartments costing US $11,749.

“(Property) developers have recognized that the real demand no longer lies in the premium segment and are opting to build smaller, no-frills apartments,” said Deepak Parekh of the Housing Development Finance Corporation (http://www.hdfcindia.com/).

It estimates the affordable housing market will be worth US$ 110 billion in India by 2013 and will account for 80 percent of India’s housing market.

“Affordable housing is not about box-sized, budget homes in far-flung places where there is no connectivity to workplaces and little surrounding infrastructure,” Parekh told HDFC’s shareholders. “Affordable housing has to be able to cut across all income segments and has to make economic sense in terms of proximity to the workplace.”

By David South, Development Challenges, South-South Solutions

Published: November 2009

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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