Inclusion and Exclusion in Cities: A Real Inclusion and Exclusion in Cities: A Real Estate Markets and Shelter PerspectiveEstate Markets and Shelter Perspective

Workshop on Inclusive Cities in India Workshop on Inclusive Cities in India DelhiDelhiJune 8, 2011June 8, 2011

Patricia Clarke Annez , World Bank

pannez@worldbank.org

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Drivers of Exclusion in Real Estate Drivers of Exclusion in Real Estate and Shelterand ShelterGovernment constraints---regulation and

underinvestment-- make real estate unreasonably costly-

Programs that tend to give empty promises for most rather than delivering results for all

A heavy handed state that pays more attention to concept and process than to implementation and results

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Exclusion in Government Real Exclusion in Government Real Estate PolicyEstate PolicyGovernment policies make it harder for the

poor to afford decent shelterThese policies have more impact than

government programs to provide affordable homes

Effects cut across all income groups but hurt the poor the most

Government intentions/programs to improve housing for the poor do not

suspend operation of market –that really only works for wealthy and well connected

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Policies reduce Supply of Land and Policies reduce Supply of Land and HousingHousing Regulations that decrease land supply and underutilize land

◦ Green belts, Urban Growth Boundaries, restrictive zoning ◦ Large government and parastatal land holdings (12.5% of

island city Mumbai belongs to port trust) Regulations and practices that make supply inelastic

◦ Complex and uncertain processes Building permits system Rural urban land conversion, permitting etc. Unclear tenure and land ownership system

Neglect of Investments to increase supply of well located land ◦ Primary infrastructure network infrastructure, to increase

carrying capacity◦ Public transport & Connectivity

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Policies then inflate demand for Policies then inflate demand for land land Regulations that increase land consumption

◦Maximum FARs very low at 1.33=4, far below world standards for large cities (NYC mostly 10, now 33 in some places, 16 in Bangkok)

◦Minimum lot size, streets and open space standards, parking requirements, street widths, reservations, etc. bid up cost of legal homes

These rules bid up the cost of land—and most strongly penalize the poor.

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Housing Outcomes in Mumbai - over 50% of population in slums—most of Housing Outcomes in Mumbai - over 50% of population in slums—most of them them not poor not poor and numbers growing over timeand numbers growing over time

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Preliminary 2010 data suggest > 65% of Pop’n Now in Slums

Ahmedabad –Slum Population Growing in Prosperous City and Ahmedabad –Slum Population Growing in Prosperous City and State State

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Empty promises--Direct govt supply will Empty promises--Direct govt supply will never be large enough to do the jobnever be large enough to do the jobDirect Subsidies and Provision are inherently

limited◦Fiscal capacity◦Political and social consensus—many unmet

needs for middle class◦Poor people will not stay in housing if it does not

suit their needs Cost of providing govt standard low cost

housing in India 20-30% of GDP—without counting the 250M popn due to be added in the next 20 years

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Government Provided Housing Government Provided Housing Limited: MumbaiLimited: Mumbai

Table 5: Mumbai Housing Stock

Sr. No.

House type Price range INR Percent of Stock Nature of Stock

1 Pavement Dwellers 300,000 – 23,50,000

3 Informal 3 Slums 45 Informal 4 Chawls

20,00,000 – 40,00,000

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Formal but non-compliant with present standards

5 Slum Rehabilitation 2 Formal initially free to slum dwellers

5 EWS LIG 5 Public Housing 7 MIG HIG

10,20,000 – 85,00,000 2 Public Housing

8 1 BHK Apartments 28

Formal 9 2 – 3 BHK Apartments 65,00,000 – 25,00,00,000 10 + 3 BHK Apartments

Total 100

Gov housing --7% of total

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AhmedabadAhmedabadSr. No.

House type Price range INR Percent of Stock

Nature of Stock

1 Pavement Dwellers 0.4 Informal 2 River front slums 10,000 – 200,000 2.0 Informal 3 Other slums 20,000 – 225,000 25.0 Informal 4 Chawls 40,000- 400,000 21.1

Formal but non-compliant with present standards

5 EWS LIG 180,000 – 500,000 8.1 Public Housing 6 Walled City 200,000 10.1 Formal but non-compliant with

present standards 7 MIG HIG

1200,000 – 1800,000 3.1 Public Housing

8 Twin/ Row Houses 900,000 – 60,00,000

30.2 Formal 9 Apartments 750,000 – 60,00,000 10 Bungalows 2500,000 –

100,00,000 100.0

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Are TDRs the answer? It will take a Are TDRs the answer? It will take a generation to house the population in generation to house the population in Mumbai’s slumsMumbai’s slums

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Annual Flow of TDR Housing would be about 4% of total requirement—as of 2001

TDRs partial but also a flawed TDRs partial but also a flawed answer answer These barter transactions make no provision for

infrastructure improvement while increasing intensity of land use—divisive with middle class

Scope for abuse built into design will land heavily on the poor and vulnerable◦ Developers artificially increase number of slum

dwellers◦ Coercive tactics for obtaining consent of 70% of slum

dwellers through◦ Squeezing slum dwellers into a small area and

offering poor quality and unsuitable housingDetract attention and interest from in situ

upgrading

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Inescapably—such promises of Inescapably—such promises of free housing are empty for all but free housing are empty for all but a few—and exclude most a few—and exclude most

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Government so often on the Critical Path-in Government so often on the Critical Path-in practice excludes the poorpractice excludes the poor

Heavy Hand and Expansive Powers in Land Acquisition and Allocation, Evictions and Relocation

Restrictive and Redistributive Master PlanningPositive permissions rather than negative list of nuisancesChronic Public Service Rationing—Exclusive and

Divisive Institutional Fragmentation and complexityComplex and Difficult to Execute ProjectsLittle ex post evaluation and learning (although this is

changing)

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There are alternatives: Start with in-There are alternatives: Start with in-situ upgradingsitu upgrading

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Inclusion and in situ upgrading Inclusion and in situ upgrading Affordable: Rs. 20-25,000 per household

for basic services. Roughly 1 % of GDP to handle today’s problem is manageable

Leveraged—Unleashes multiples of government spending in private household investment

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Inclusion and In Situ UpgradingInclusion and In Situ UpgradingRobust models for implementation SNP

Ahmedabad◦Household financial contribution—buy in◦Community supervision--control◦Community manages difficult tradeoffs—

relocations and demolition--autonomy◦Limited de facto property rights—feasible at

scale, and provides security to invest

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Inclusion and In Situ UpgradingInclusion and In Situ UpgradingLegitimizes affected households, their land

use and their homesLesson learned—Identify expected relocations

up front to make no eviction promise credible. Extensions

◦Improve city wide infrastructure at same time to provide benefits to middle class

◦Reduce policy driven supply constraints to improve long term affordability and avoid further slum proliferation

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Thank you!Thank you!

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