Yeshwant Shantilal Lodha, an apparel shop owner in Chitralaya market of the industrial town of Boisar near Mumbai, bought a two-bed room house in Usha Breco's Boisar township project at a cost of Rs 16 lakh. His business earns him Rs 20,000-25,000 per month. Like many others, this is his second investment in a house.

“I like Boisar. It’s calm and peaceful. The connectivity is expected to better as they are increasing rail tracks to Virar,” said Lodha. Boisar, a small industrial town just outside Mumbai and Virar, is at the far end of western suburbs of Mumbai. The suburban rail system in Mumbai is expected to increase its connectivity.

Lodha's case is an answer to some of the important issues raised by Deepak Parekh, chairman of HDFC Ltd, who once famously called the concept of affordable housing a “misnomer”. In words, which have since found resonance, he had said, “Affordable housing is not about box-sized, budget homes in far-flung places where there is no connectivity to work places and little surrounding infrastructure. Affordable housing has to be able to cut across all income segments and has to make economic sense in terms of proximity to the work place.”

As if to address this issue, there are many projects that are coming up in those micro markets, which have good connectivity and catchments of target groups working in close by places, a segment which was for long ignored by developers keen to pursue projects and built homes for premium or higher income category. Consider this: as per government statistics, 35 per cent of India's urban dwellers live in single bed room houses. While there is no study to indicate the demand supply gap for housing in India, a recent government research pegs it around 24.71 million.

With the demographics of India, getting younger with each passing day, it becomes impossible for a an average Indian whose age is around 25-30 years, to buy a house beyond Rs 25 -Rs 30 lakh range.

Contrary to earlier days, an average Indian looks to invest in a house during his early years rather than wait for retirement. Hence, to address this upwardly mobile average Indian, developers are jumping into affordable housing segments. Jaitirth Rao, the former chairman of Emphasis, started a new real estate development company called Value and Budget Housing Corporation. He plans to build houses that costs Rs 7 lakhs or less.

The agenda for affordable housing requires a combined public private collaboration and a strong political will to enforce change. “The major reasons for affordable housing in these areas are the availability of vast land tracks at affordable rates. Presence of sizeable numbers of low-income group categories in the immediate vicinity is another reason. So if there is industrial development, significant numbers of skilled and unskilled labourers would automatically create primary catchments for affordable housing,” predicts Gulam Zia, national director - research and advisory services, Knight Frank India.

The proximity to Mumbai makes it an attractive destination for a real estate investment, Lodha adds for good measure. Besides Usha Breco, the other projects that are coming up in Boisar include, Tata Housing's Shubha Griha Project. The other micro market of Mumbai, Karjat, has seen projects like Tanaji Malusare City and Shiv Aum Gardens.

Besides these micro markets, areas like Nehar Par in Faridabad, Rajnagar extension in Ghaziabad, Sector 137 in Noida and a few sectors in Gurgaon are developing as what is now popularly known as affordable housing hotspots. "During the recession, there was a marked slowdown in sales for higher-priced units at Gurgaon, but the degree of drop was no more and no less that on par with what was witnessed in the rest of the country. This was a key phase, in which developers had to take decisions that would have an immediate and long-term effect on their business viability. Fortunately, they aligned their business models to the new demand dynamics and finally started catering to the middle income segment by launching affordable and mid-sized apartments," said Santhosh Kumar, CEO – operations, Jones Lang LaSalle Meghraj.

Parts of Kolkata that are witness to these developments include Jessore Road, in and around EM Bypass, Naredrapur and Maheshtala. Bangalore, too, has its quota of such locations. Areas like Doddaballapur, Sarjapur Road, Kanakpura Road and in and around Bannerghatta road have seen a rash of affordable housing townships spring up.

The concept of affordable housing is better understood now than when it was announced. People are also getting expectations right. We are still far away from realising the fruits or outcome of these projects.

Agrees Ravi Ramu, director of finance of Puravankara Projects , a Bangalore-based real estate firm. “There is still a long way before its impact can be visualised in reality.” Puravankara Projects’ subsidiary called Provident Housing and Infrastructure , was one of the first few companies to announce affordable housing projects.

Infrastructure still remains a concern. “We try and look for land in areas where there is a decent level of connectivity. We can connect roads up to 1-2 kilometres. We cannot do anything about power, transport and water facilities,” admits Uday Dharmadhikari, CEO of Usha Breco Realty, a Mumbai based, mid-sized real estate firm.

“The agenda for affordable housing requires a combined public private collaboration and a strong political will to enforce change,” HFDC’s Parekh had earlier said in the company's annual report.

“Infrastructure has been a state subject. Hence, unless developed in partnership with government, nothing much can be done about infrastructure improvement,” adds Zia.

“After a lot of hoopla and misinformation it is only now that people are witnessing the true face of affordable housing. The concept is being better understood both by promoters and buyers since when it was first announced. People are also getting their expectations right. To understand the full scope of affordable housing, it could still take some time. In this 2010 will be a defining year, says Santosh Kumar of Jones Lang LaSalle Meghraj.

On the general real estate market outlook, a recent Crisil report said “Demand for houses will improve marginally in 2010, backed by better job security owing to higher growth in the economy. Of the 10 cities it surveyed, CRISIL Research is of the opinion that Bengaluru will witness the maximum increase, whilst Ahmedabad will see the steepest fall.”

The research further adds, "capital values witnessed during the first half of 2008 seem unachievable in 2010. CRISIL Research’s forecast says that the peak capital values witnessed in 2008 may not be reached in the next one year, since we expect capital values to rise only marginally in 2010. Of the 88 micro-markets, only Chandigarh- Phase 1 and West Delhi are expected to reach their peak capital values."

(Shilpa Shree is a freelance writer)