Wednesday, 7 June 2017

Is being green unaffordable?

I remember being on the dais of a conference. Real estate – affordable housing. The topic of group discussion was – whether affordable housing should be Green. Sharing dais were one of the eminent architect, director of a research company and couple of reputed developers.
I was mooting that what is not Green, is not Affordable. Everyone was disagreeing with me to different degrees. May be I was not able to put my argument convincingly or, clearly. Now, five years since then, one of the developer approached me and asked, can we make a project water, energy and waste disposal self-sufficient through design for one of his large affordable housing project as, the project location did not have public services in vicinity.
When one thinks about product design in real estate, he seldom thinks about target customer. The sluggish market has shown them what is missing in product mix and design. Using the buzz word “affordable housing” rampant but, idea of sustainable development was hard to sell as developers were successful in selling by adding up free bees or, amenities. Now, it really becomes a point of discussion – what are amenities that are valued for customer segment that are not able to afford a house and hence, want affordable housing. Developers must see that the project should be affordable to the extent that for customers/ users the cost of acquisition becomes more or less cost of ownership. At least for the period during which the customer repaying loans. There is no point in making homes that can be bought but in the process, buyer loses all his future income and hence, can’t spend to maintain it. That is also more reason to make homes that not only requires less maintenance but also demands less travel time and common maintenance expense. One should ideally target no or low living & maintenance expenditure for 15-20 years. This is possible only and only if the development is Green.
However, for LIG & EWS the case may be not same and require acquisition cost to be lowest may be at the cost of no - maintenance life as low as 5 years.
People were hovering around with numbers in millions as demand, but not much effort has been taken to serve this segment. Issues that demoralize such efforts are - Low mark ups, CRM is different than usually practiced in tier I/ tier II that caters to MIG & HIG, Tier III have small volumes demand per project, Lacking focused designs, construction technology and sourcing of material.
Procurement has to be part of planning activity so as to minimize waste and optimize construction cost. It is necessary that things are well planned in advance as such project’s costs are very time and quality sensitive. This segment will always have demand and attractive for revenue flows. The question is – proportionately largest habitat has to be sustainable and Green or, can we make only 25% development environmental friendly and hope to achieve environmental sustainability. I think answer is very simple – can not leave that 80% behind.

Urban infrastructure, of which housing is an important part of, must consider factors like  – living expenditure & quality, connectivity time & cost, loading to public services & neighborhood and, discharge to environment. These needs to be planned & designed not only for acquisition but for long term use being high capex activities. Hence it compulsorily has to be Green.

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