Harshil Mehta CEO, Aadhar Housing Finance Pvt. Ltd.

Low - Income Housing

Agenda

• Indian Housing Sector - macro view

• Affordable Housing Scenario

• Demand

• Initiatives from Govt. and other facts

• Challenges

• Aadhar and it’s experience in the segment

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3

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Key

Gro

wth

Driv

ers

Increasing Population

Housing Shortage

Rising Urbanization

Nuclearization of family

Young India

Rising Affordability

Government’s thrust on housing

Growth of Housing Sector

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Mortgage to GDP Ratio

Mortgage to GDP ratio has increased in India from 2 % in 2002 to 10% in 2011 and is expected to increase to 20% by the year 2020

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MP

UP

Odisha

C’Garh

J’khand

Bihar

WB

1.29

2.38 2.04

2.04

Housing Shortage (in millions)

0.47

0.36

0.5

• Housing shortage in India expected to be over 26 million units by 2012 (Source: KPMG). • Over 90% of this demand is in the 300 – 800 sq. ft. size category (defined as EWS and LIG).

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Income Level Dynamics Price of a Unit

> 40,000 p.m.

All major builders present

Increase in cost can be easily passed on to customers

Very high returns on the projects

Large number of financing options in private and public

sector banks and HFC’s

> Rs. 24 L

24K – 40K p.m

Category B & C builders present

Good returns on the projects

Good number of financing options in public sector banks

and major HFC’s

Rs. 10 L – 24 L

< 24,000 p.m

Builders hesitant to enter into the space due to cost

constraints and low returns

Lack of adequate project loans to builders in this

category

Judging credit worthiness is extremely difficult

Very few formal financing options available

Rs. 3 L – 10 L

Estimated Market Size

Rs. 5000 billion

Rs. 9000 billion

Rs. 10,000 billion

Affordable Housing Scenario

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The lower and middle income segment (LMI) i.e. households earning less than Rs. 24000 per month forms 90% of the total Indian population (approx. 1000 million)

Gre

ater

than

Rs.

80,

000

pm

Rs.

40

K to

80

K p

m

Rs.

24 K

to 4

0 K

pm

Rs. 6000 to 24,000 pm Less than Rs. 6000 pm

> Rs. 80 Thousand pm 1 % of population, 14.3 million

Rs. 40 -80 Thousand pm 3 % of population, 28.1 million

48 % of population, 530 million 42 % of population, 470 million

Rs. 24 -40 Thousand pm 6 % of population, 72 million

Less than Rs. 24,000 pm 90 %

of population, 1000 million

Majority of the demand is in Lower and Middle class income group

Demand

Initiatives from Govt. National Urban Housing and Habitat Policy, 2007

Implemented by Ministry of Housing and Urban Poverty Alleviation Promote & enhance the role of Government as facilitator and regulator Focus on habitat with regional planning approach Earmark land for EWS/LIG groups Focus on governments social housing schemes so as to increase affordable

housing Jawaharlal Nehru National Urban Renewal Mission

Basic Services to the Urban Poor Integrated Housing and Slum Development

Indira Awas Yojana Cash subsidy scheme for rural BPL families

Impetus on Affordable Housing Interest Subsidy Scheme for Housing the Urban Poor 1% Interest Subvention Scheme

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• Infrastructure planning is critical and

both government as well as private players need to work in close co-ordination to ensure more low cost housing projects are created in future.

• According to World Bank, Low-cost housing units of 200–350 sqft. priced at apprx. Rs 200,000–320,000 would be affordable without subsidies to 23–28 million Indian households. Those households already pay rents comparable to the mortgage EMIs they would pay.

Customer

Housing Finance

Company

Government

Agencies

Local Builder

Win win for all…

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Win win for all(Local Builder)…

Though low income

housing has lower margins but the IRR is higher due to high demand

and low turnaround

time

Challenges • Low developer/DA/ activity impacts housing availability across markets.

• Getting KYC documents for non earning applicants is a challenge. Majority of these are

spouse (Home Maker) where ID, DOB, signature, permanent resident address proof is not available.

• Availability of proper legal chain documents is a constant challenge, and technical deviations in the property is common in these locations, as the borrowers(purchasers) are unaware of the legal and technical norms.

High cost of operations-

• The field investigation, legal and technical evaluation charges are much higher in smaller locations as economies of scale are low and vendors are hard to find.

• Cost of collection is a constant challenge as very few locations are ECS • High cost of borrowings further impacts the cost of operations.

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About Us

Aadhar is supported by DHFL and International Finance Corporation (IFC)

Aadhar is registered as a Housing Finance Company and Regulated by the National Housing Bank

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Low Income Groups with an average monthly income between 5k-20k

Salaried, self-employed & agricultural based income profile to be catered

Loan offering up to Rs. 12,00,000 but not exceeding 80% of the cost of property

Mon

thly

Hou

seho

ld In

com

e Extend opportunities of Home Ownership to the underserved section of the Indian population

Source: NHB trends in Housing | CRISIL Infra Report | Monitors Research

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Focus

The Aadhar experience- Responsible Financial Inclusion

Paramarsh Shivir – • Consultation Camps(Paramarsh Shivir). • Information shared on Property Selection, Technical & Legal aspects, finance and importance of

timely repayment. Aadhar Awaas Mela – One stop solution for low budget LMI segment under one roof . Meeting of – • Property developers • Legal & Technical experts • customers Developer-Customer interactive sessions – • Creates Awareness on the supply side on the prospect and scope in affordable housing thus

encouraging them to develop suitable properties for the low income segment. Aadhar Sanyog (newly introduced)– • Brings financial, legal and technical knowhow at the doorstep of the customer by conducting

interactive sessions at LIG and MIG housing colonies. • Makes information convenient and easy to understand for a layman and solves their queries.

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HFCs in the segment -

Some of our Customers

Customer-

Applicant – Mr. Sohan Pal Singh a Bareilly resident is employed as a Peon

with Ayurvedic College in Kasampur , Meerut.

Income : Net salary of Rs. 10,000. His elder brother is a General Physician

& younger brother has a cable TV repair business.

Current Property-

The customer wanted to demolish his existing house & build a G+1 unit .

Customer has maintains average balance in his savings account & also

has timely salary credits .

AHFL has disbursed a loan of Rs. 2 Lakhs to Mr. Sohan Pal Singh to

reconstruct his dream home .

BEFORE AFTER

Some of our Customers Customer-

Applicant - Mr.Purushottam Chandrakar along with his brother runs a

fabrication workshop in Raipur for last 5 years

Income - Joint income of applicant & his brother is net Rs. 27,500.

Current Property-

The customer resides in his two room parental house with his parents ,

brother , wife & two children . His dream is to continue staying in a joint

family and have their own house where his children would grow up and

have a bright future . They identified a property but had hesitation due to

high interest rates in the market.

When he got to know about the loan structure at Aadhar Housing

Finance Limited he saw a ray of hope and felt Confident. Aadhar

disbursed a loan of Rs. 11.9 Lakhs and he now sees his dream turning

into reality .

BEFORE AFTER

Building Awareness

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Outcome

• Strong customer base of 3308 and growing. • 80% of customers earn below Rs. 30,000/month • 26% of customers are self-employed. • 24% of loans are disbursed in rural areas. • 40% of total customers pay through ECS. • 93% of customers are ECS enabled. • Average ticket size of Rs. 6 lakhs. • 30% of customers prefer self construction. • 86% of customers prefer individual units as against

flats.

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A typical ,Aadhar approved, builder profile • Local builders having city/regional/state presence.

• Having experience of more than 10 yrs. In the industry and delivered 5-10

projects.

• Built and delivered 500-1000 units during the tenure of about 10 yrs.

• Moved into affordable housing because the time taken from start to commercialization of the project is fast.

• The affordable housing projects are usually undertaken at the outskirts of the city/town and consists 300-500 units on an average.

• The projects are a combination of low rise(G + 3), row houses and plots.

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A typical LIH project

Paramarsh Shivir

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Aadhar Awaas Mela

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Developer-Customer interactive sessions

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Aadhar Sanyog

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