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An Affordable Housing Option for India's Expanding Cities


In dozens of booming Indian cities, low-income workers are finding new opportunities to own small apartments where their families can live safely, comfortably, and affordably. It all comes down to the emergence of long-term micro-finance lenders, coupled with developers who see opportunities at the bottom of the housing market. This could be transformational for India.

“There is a huge lot of rickshaw pullers, construction workers, small shopkeepers, drivers, security guards, laundrymen—these people earn well, but nobody has gone to them and offered them anything,” architect Sanjay Shah told the Financial Times. “That is our target market.”

“Margins for low-income housing are far lower than for luxury apartments,” the FT reports, “but developers say the demand is strong and projects sell out fast… While the government is building affordable homes for low-income workers, its agencies operate at a glacial pace.” In to the gap have stepped new property developers and micro-lenders. “These are absolutely viable projects,” says the director of a developer in Ahmedabad, the capital of industry-friendly Gujarat in western India.

This trend could help set off another long wave of economic growth and give many millions of poor Indians a real stake in the system. While America’s housing bubble shows what can happen when government involvement in the mortgage market goes sour, it is very much in the interest of developing countries to identify government policies that can make long term mortgages to ordinary families practical. Few social policies can do as much good for as many people while promoting political and economic stability.

[Indian construction worker image courtesy of Getty Images]

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