Creating Homes – Affordable Housing in India

By Katharina Riese (TÜV Rheinland), Svenja Wittkämper (TÜV Rheinland)
04:59 PM, July 18, 2013

In recent years there has been a large migration wave from India’s rural regions to the cities. Soon, 40 percent of the Indian population will be living in the country’s urban centers. Due to this fast growth and the large influx of people, cities are having trouble providing adequate living spaces, utilities, and facilities. More than 130 million people – equivalent to 40 to 60 percent of the urban population – are expected to be living in substandard housing. These low-income groups face a broken housing market that hinders them from living in an affordable and quality home.

Ashoka Innovators for the Public, an association of the world’s leading social entrepreneurs, and TÜV Rheinland, a global inspection, certification, training, and consulting company, are using their joint competencies to facilitate the exchange between real estate developers and the low-income population. The mission of the joint project “Creating Homes – Affordable Housing in India” is “[to] create a rating system for affordable housing that certifies sustainable, safe, and quality housing for BoP [bottom of the pyramid, referring to the poorest socioeconomic group] customers.”

The large influx of immigrants has left the cities in dire need of innovative city planning measures and approaches to find appropriate housing. Due to the large differences in monthly incomes – which range from 3,300 INR (approx. $65) for the most vulnerable to 25,000 INR (approx. $500) for informal sector workers and micro-entrepreneurs – there is no all-encompassing solution. The focus of this project is on the low-income urban population earning between $200 and $500 a month. From a financial point of view, these urbanites would be able to afford a new home at market price in a well-functioning real estate and financial market. Yet, the reality is just the opposite. Low-income families are facing multiple barriers such as a faulty property rights system; bureaucracy combined with corruption; low-quality, expensive building materials; restricted distribution channels; and lack of financial and technical support. Factors such as irregular incomes and no provable financing or tax receipts deter the banking and housing industries from including informal sector workers and micro-entrepreneurs into the market.

 

Key Facts

InitiatorTÜV Rheinland
Project start

Statusongoing
Region
India
Contact person
Katharina Riese
Awards

Project benefit

  • Offering decent housing
  • Development of the BoP

Main Issue

Anti-Corruption -
Business & Peace -
Development x
Environment -
Financial Markets -
Implementing UNGC Principles in your Corporate CSR Management -
Human Rights x
Labour Standards -
Local Networks -

Project Type

Advocacy of global issues x
Business opportunities in low income communities/countries -
Project funding x
Provision of goods -
Provision of services/personal x
Standards and guidelines development -

Partner

Alleviating these market inefficiencies – and thus improving the housing situation for the mentioned income group – is the mission of Ashoka’s initiative Housing For All. The civil sector, TÜV Rheinland, as well as additional actors from the private sector have combined their complementary expertise to set up a framework for a market-based solution. Whereas developers are in possession of a wide knowledge base about land acquisition, construction, design, financing, as well as legal and fiscal regulations, citizen sector organizations can provide valuable insights into the needs and demands of the target group. By introducing new entrants to the market, examples can be made, positive impacts demonstrated, the mindset of the market changed, and the supply of affordable housing increased. In the end the synergy is beneficial for the businesses, communities, and customers involved.

Besides the mere increase in housing supply, the initiative focuses on ameliorating quality by developing a best practice standard. The project partners TÜV Rheinland and Ashoka are combining their expertise to create a certification that sets a benchmark for quality housing. With the help of this benchmark, real estate developers and low-income families will receive guidance on appropriate and attainable housing with the best quality to cost ratio. The standard provides consumers with a high level of transparency, which allows them to make an informed decision. Besides empowering the low-income families, the certification positively influences their living conditions, as safety, sustainability, and accessibility to utilities are part of the eligibility criteria. For developers, the rating system serves as a guideline to help create homes that fit the needs of the target group. Furthermore, the certification requirements lead to optimized processes and reduced transaction costs.

To create appropriate quality housing, the rating focuses on four areas: finance, construction, energy and environment, and community. The aim is to facilitate the access to financing options; to ensure safe, qualitative, and legal construction; to consider resource-efficiency and the carbon footprint of the new development; and to meet the customers’ needs. From different angles this view provides a holistic evaluation of the lifecycle of a building as well as the demands of its occupants. A set of criteria for each of the focus fields is formulated with the help of subject experts. TÜV Rheinland is relying on its 140 years of experience in developing and conducting certifications to establish, for example, the pillar concerning energy and environment. As project manager, TÜV Rheinland coordinates the realization of the rating process, trains certifiers, and is in charge of awarding certifications to exemplary residential buildings. The result of these concerted efforts is a rating system that covers the length of the housing development project – from the first planning ideas to the time when the house becomes a home.

The cooperation between TÜV Rheinland and Ashoka is scheduled for a four-year period, after which a profitable, affordable housing market will have been created. According to market studies, the affordable housing market is worth $500 billion, as India faces a shortage of an estimated 25 million homes. Besides setting up a lucrative market for developers, interaction between developers and the urban poor has been fostered and has resulted in added value for all participants. For low-income families, the project will lead to increased dignity and quality of life as well as to an improved economic status. In addition, the environment profits from installed energy-efficient technology and resource-saving measures considered in the realization of the project. Ameliorating the lives of excluded members of society as well as applying innovative environmental solutions go hand in hand with the UN Global Compact Principles. By ensuring the initiative is profitable, the sustainability of the project can be guaranteed over many years. Furthermore, the developed certification is easily transferable to other cities within India as well as worldwide, for example to Colombia, Brazil, and Egypt, where comparable projects are being implemented.

Our Mission

TÜV Rheinland is a leading international technical service provider. Our goal is to be the world’s best independent provider of technical services for testing, inspection, certification, consultation, and training. Since 1872, we have been developing solutions to ensure the safety, quality, and economic efficiency of the interactions between humans, technology, and the environment. We firmly believe that social and technological progress is inextricably linked together.

This project description was originally presented in the Global Compact International Yearbook 2013.

About the Authors
Riese, Katharina

 Katharina Riese is working as a manager for CSR and sustainability for TÜV Rheinland.

 
Wittkämper, Svenja

Svenja Wittkämper works for the TÜV Rheinland Holding.

 
The views expressed in this article are the author's own and do not necessarily reflect CSR Manager's editorial policy.
 
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