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Affordable Housing & TOD...Link Affordable Housing Production to Market-Rate Development Fast-track...
Transcript of Affordable Housing & TOD...Link Affordable Housing Production to Market-Rate Development Fast-track...
TOD & Affordable HousingPotential to Combine Objectives
Dao Harrison
Senior Housing Specialist
Sustainability, Urban, Resilience & Rural (SURR) GP
KEY MESSAGES
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1. TOD + Affordable Housing: Blending Objectives
2. Key Outcomes: Unlocking Land Value + Build an Inclusive TOD
HOUSING SECTOR TRENDS IN MUMBAI METROPOLITAN
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Index 2009 2014 2016
Land Price 2000 6500 6500
Income index
2005=100
170 330 402
I Rate (%) 9.5 10.25 8.5
Unsold units 59,040 116,872 258,796
Annual Sales 57,966 35,083 50,456
Mos.
Inventory
14 45 63
Trends in Mumbai Metropolitan Region (MMR)
Source: Liases Floras 2017
Land Price Tripled in Price while Inventory-on-hand at 5 Years Stock Level
KEY SUPPLY SIDE CONSTRAINTS FOR AFFORDABLE HOUSING
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• Access to affordable land: Speculative and
hoarding of land common
• Land acquisition - time consuming and
expensive process
• Slow construction approval permitting
• Debt financing and/or Equity funding are
expensive
➢ Housing categorized as infrastructure
expected to ease debt financing cost …
though likely only for larger developers
Leading developers such as Tata Housing, Mahindra Lifespace, etc. are going down market
New breed developers such as VBHC are also entering segment
• AH Supply requires different model
o Volume game w/ shorter cycle time
o Construction process needs to be
automated and cost-efficient
• Thinner margin, eased by faster
absorption rate if done right
• Cheap un-developed land requiring higher
cost of infrastructure development
➢ AH Business Model Still Emerging as
market acceptance varies depending
greatly on location
Unique Challenges: Affordable HousingCommon Challenges
CURRENT DEVELOPMENT TREND:
LEAPFROGGING TO ACCOMMODATE HIGH COST OF LAND
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Lack of land within city limits have pushed developers to develop
projects in sub-optimal locations for low-income segments
Sub-optimal locations lack access to employment opportunities and
access to basic services and social connectivity
Source: Jones Lang La Salle
NO SUPPORT INFRASTRUCTURE AND LACK OF CONNECTIVITY
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Project in Karjat: Sheltrex
HOMES BUILT FAR AWAY FROM CITY CENTERS CAN LEAD TO HIGH
VACANCY RATE & ABANDONMENT
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Source: MPWH Evaluasi Unit
Source: https://www.bloomberg.com/news/articles/2013-05-21/mexico-s-400-000-abandoned-homes-draw-venture-capital
Indonesia Subsidy Projects Built Far Away
With High Vacancy Rate
36%
64%
KPR SUBSIDY QUALITY RESULTS
Vacant Units Inhabited Units
Sample size: 14,393
FACTORS AFFECT HOUSING AFFORDABILITY ACROSS THE
HOUSING VALUE CHAIN
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• Land Acquisition
• Permits and Approvals
• Rental Rates
• Amenities Costs
• Down payments
• Availability of Mortgages
• Interest Rates and loan periods
• Household savings
Land Acquisition Construction
CostsEnd User Finance
Occupational Costs
• Infrastructure
• Building Materials
• Labor Costs
• Financing Costs
• Offtake Risks
NATIONAL LEVEL REGULATIONS AND POLICIES
TOD policies can address challenges here
AFFORDABLE HOUSING STRATEGIES ENABLED BY TRANSIT
Core City Districts
• Highly valued land
• Affordable housing difficult and
expensive to build
Urban Fringe/Inner Suburban
• Medium-high land values
• Affordable housing can be
paired with market-rate
developments next to stations
Suburban Transit Stations
• Lower land values, but newly
accessible land
• Large amounts of affordable
housing can be created as part
of TOD districts at these
stations
MUTP3 LOAN PROGRAM: VIRAR-PANVEL CORRIDOR STATION
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Existing conditions of Virar-Panvel rail corridor
POTENTIAL DEVELOPMENT AREAS AROUND VIRAR-PANVEL
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Nilaje: Existing areas of development and open land
Taloja: development not currently
connected well to station
Bhiwandi Road
Taloja
Nilaje
Nighu/Narivali
Tambode
Nighu/Narivali: Vacant
land available for large-
scale comprehensive
TOD implementation
Bhiwandi: areas of
ongoing development and
available land
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Not Leveraging TOD for
Affordable Housing Development
=Loss Opportunity
KEY MESSAGES
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1. Why TOD + Affordable Housing: Blending Objectives
2. Key Outcomes: Unlocking Land Value + Build an Inclusive TOD
TOD CAN CAPTURE VALUE & PROVIDE AFFORDABLE HOUSING
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Station
Within 500m-2km:
Coordinated
development plan
with funded
infrastructure
Affordable housing can
be developed in these
areas, partially cross-
subsidized by profits at
immediate station
Within 500m: core
station area with
highest densities and
land value
Land Value Capture
through FSI premiums,
etc. to fund infrastructure
and social housing
Cross
subsidies
LVC provide funds to invest
in infrastructure & housing in
extended TOD station area
Extended TOD station area:
ridership for rapid transit
services + customers for
commercial facilities around
station
Extended TOD Station Area
• Transit-oriented districts can be excellent places
for affordable housing
• Leverage available public land to create housing
(Singapore example: right)
• Slums/informal housing areas are inherently
transit-oriented. Upgrading opportunities and
insertion of new social amenities can enhance
connectivity to new stations
• Over time, land readjustment that increases FSI
around stations can be considered
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TRANSIT OPENS NEW LAND FOR ACCESSIBLE HOUSING
TWO COMPLEMENTARY APPROACHES FOR AFFORDABLE HOUSING
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Preservation
• There are multiple, appropriate preservation opportunities
• There is high potential for displacement of existing renters, so a wide range of rental arrangements must be available
Production
• There are multiple opportunity sites for new development
• Redevelopment of underutilized sites,
• Vacant lots,
• Joint public/private development
Most TOD strategies focus on production of new housing
• Public land dedication and write-downs
• Joint public-private developments
• Land banking
• Land readjustment
Image Source: Yeowatzup. Public Housing & MRT, Commonwealth, Singapore. Photograph. Flickr. April 3, 2009. Accessed November 14, 2016. https://www.flickr.com/photos/yeowatzup/3410344505/sizes/l.
Public housing in
Singapore
Housing Production: TOD with public land acquisition can be used for affordable housing
Source: Kazucko Ochizuco, TTILIT
Reserved land(future budget for project)
ExchangeReduction
Before
After
Project cost for land readjustment
(development of land, public facility)
Income from sales of
reserved land
Public budget
Public Facility(Road, Park, etc.)
Housing Production: Land readjustment (Town Planning Scheme) as prerequisite
Inclusionary zoning
Incentive-based zoning (FSI)
Image Source: EMBARQ Brasil. DOTS Cidades - Manual de Desenvolvimento Urbano Orientado ao Transporte Sustentável. November 2014. Accessed August 23, 2016. http://wricidades.org/research/publication/dots-cidades-manual-de-desenvolvimento-urbano-orientado-ao-transporte.
Housing Production: Link Affordable Housing Production to Market-Rate Development
Fast-track permitting
Fee-waivers, reductions
and deferrals
Regulatory
accommodation for
small sites
Allow for and promote
incremental housing
Council flats in the
United Kingdom.
Image Source: Slum Dwellers International. Kenya Affordable Housing. Photograph. Flickr. August 14, 2013. Accessed November 14, 2016. https://www.flickr.com/photos/sdinet/9510269550/sizes/o/.
Affordable housing in Kenya
Housing Production: Reduce building costs with coordinated TOD planning
1. Protect against immediate renter displacement
2. Homeownership assistance (housing demand)
3. Preserve existing subsidized housing and low-cost rental housing
Housing Preservation Strategies and Tools
INCLUSIVE TOD = SOLUTION TO BROADER AFFORDABILITY DEFINITION (H+T)
22Source: TOD 201
Inclusive TOD: Address Gentrification and Displacement
Chinatown, Kuala
Lumpur, Malaysia
Inclusive TOD: Local Economic Development at Corridors
Denver/Boulder
Accommodating existing informal
sector workers, such as food
hawkers, is a way to provide safer
locations where needed services
and job opportunities are available.
One such example of this are the
neighborhood hawker centers in
Singapore.
Image Source: Tiberbiu Ana. Hawker Center. Photograph. Flickr. May 5, 2012. Access
November 11, 2016. https://www.flickr.com/photos/txberiu/7144522029/sizes/l.
Inclusive TOD: Job Creation Opportunities
A hawker center
in Singapore
HOUSING OPTIONS SUPPORT A HEALTHY ECONOMY
High-value added /
innovation economy(e.g. technology & financial services)
Middle class professional
& manufacturing business
LIG / EWS labourers and
support staff(e.g. cleaners, drivers, cooks,
labourers, construction workers, etc.)
Market provides ample
choice in housing at a
variety of locations
Market provides
sufficient housing choice
at accessible locations
Lack of housing options,
with substandard
dwellings and/or
inaccessible locations
Even technology-focused economies are sustained by large
populations of laborers and support staff, and they need housing
options that are affordable and accessible
Current Status
INCLUSIVE TOD IS FAR MORE POWERFUL THAN TOD
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Source: TOD 201
OPPORTUNITY FOR CHENNAI: TOD + AFFORDABLE HOUSING?