In the past few decades, urbanization and industrialization have increased significantly in developed and developing countries. People from rural areas have migrated to metropolitan cities and industrial towns in search of better jobs and economic opportunities. Accordingly, over the years, the population of these urban areas has increased exponentially. While urbanization has impacted the global economy positively, issues of homelessness and vehicular congestion have also emerged. These problems have further created other socio-economic challenges related to rising crime, lack of sanitation, poverty, growing inflation, etc.
For instance, several societal studies have shown a correlation between homelessness and crime. A research paper published in the National Institute of Health journal highlights that the rate of violent crimes was around 40% higher than the normal population, while that of nonviolent crime was 27% higher. On the other hand, a survey done by the San Diego District Attorney found that homeless individuals were at higher risk of homicide and sexual assault than the domiciled population.
To address the problem of homelessness, governments across the globe have launched initiatives to provide affordable housing solutions to vulnerable sections, thus helping improve the living conditions in urban areas. Additionally, in the post-pandemic period, the housing rates have surged drastically, thus compelling even the middle-class population to look for inexpensive residential spaces. Thus, both public and private companies have invested heavily in the affordable housing industry to cater to the shifting demands of their customer base.
Environmental sustainability and energy efficiency transforming the landscape
The construction sector has traditionally been one of the most polluting industries in the global economy. In the past few decades, as environmental consciousness has increased, companies have been compelled to opt for eco-friendly building practices to align with the changing dynamics. As per Allied Market Research, the rising transition toward sustainability is expected to help the affordable housing market flourish. The industry is predicted to gather a revenue of $84.7 billion by 2031, rising at a CAGR of 4.9% during 2022-2031.
For example, the idea of green roofs has become quite popular in the affordable housing industry. A green roof refers to a building roof that is completely or partially covered with vegetation. Generally, such roofs also feature drainage and irrigation systems to sustain the plant life, while at the same time avoiding leakages. The rising problem of global warming and urban heat islands is the main reason behind the increased preference for green roofs.
The most obvious benefit of this novel concept is that it helps reduce the impact of excessive heat and regulates the ambient temperature. In general, plants absorb more than 50% of the sunlight and reflect the rest, thereby aiding in keeping the climate cool and pleasant. This also reduces the need for air conditioning systems which release ozone-depleting substances and other air pollutants. Environmental studies have shown that in the long run, green roofing systems reduce the temperature of nearby surroundings by around 3°C. Recently, a survey was done in Kansas City, Missouri to ascertain the environmental benefits of green roofs. As per the air quality indices of suburban areas, this eco-friendly building practice helped reduce CO2, SO2, and nitrogen oxide emissions from the atmosphere.
Governments in India and China promoting affordable housing schemes
As mentioned earlier, several developed and developing countries have launched several initiatives and schemes to provide residential spaces at reasonable rates. In India, for example, the concept of affordable housing has been welcomed by policymakers, private companies, civil societies, and even environmental activists. As per CREDAI-MCHI, a real estate agency in India, a majority of the population in India prefers low-and-middle-income housing. However, as per a study by the organization, only 10-20% of this demand is currently met by the construction sector.
To address this supply-demand mismatch, the Government of India launched the Pradhan Mantri Awas Yojana (PMAY) in 2015. The primary aim of the scheme is to provide affordable housing to all citizens of the country, especially the urban and rural poor, by 2022. Under the program, the beneficiaries are offered a home loan for 20 years at a subsidized rate to reduce the burden of debt. Moreover, sustainable and eco-friendly construction practices are adopted to build homes, thus reducing the carbon footprint of the industry. The scheme has been expanded to cover more than 4000 statutory towns and 500 Class 1 cities across the country. Considered one of the largest housing programs globally, PMAY has been widely appreciated by urban planning experts due to the preference given for the marginalized sections of the population including economically weaker families, transgenders, elderly, and widows.
On the other hand, the Chinese government has unveiled affordable housing plans to revive its domestic construction sector and boost the demand for residential spaces in Tier-1 cities such as Beijing. In May 2023, local authorities in the country’s capital city issued a directive ordering construction companies to offer their newly constructed apartments and townships to customers at reasonable rates. The main aim behind this strategy is to boost consumer confidence and to reduce the outward migration of doctors, teachers, engineers, and researchers to other cities.
The final word
The affordable housing industry has witnessed huge growth in the past few years due to the increasing proportion of the middle-class population and the migration of the working-class section to cities and industrial towns. The rising preference for eco-friendly building practices and adoption of green technologies is anticipated to strengthen the foothold of the sector. Moreover, governmental initiatives and schemes by various countries are estimated to bring in new investment opportunities in the industry.
✍ **𝑨𝒓𝒕𝒊𝒄𝒍𝒆 𝒘𝒓𝒊𝒕𝒆𝒓: Akhilesh Prabhugaonkar
