Tata Shubh Griha Vashind - Allotment of Flats

Tata Housing has just declared the allotment of the 1300 Shubh Griha flats (1 RK / 1 BHK) being sold at its new Vashind project. It is believed to have been oversubscribed several times over and thus the allotment has been made through a lottery.

For a list of the successful applicants, please click on
Tata Shubh Griha Vashind allottees

Of course, this is an approved project for MHFC and hence, we will finance successful allottes (subject to our terms and conditions - for more details, please see our website http://www.mhfcindia.com/ or call for more information on 22660427 / 22660130).

Separately, MHFC also has a special quota of 208 flats on the same project (which we will be allotting on a first come first served basis) so unsuccessful allottees who meet our criteria can call us for a chance to get an allotment.

Prepayment Charges

Since its inception, MHFC has had a NIL prepayment charge policy. This is because we encourage our customers to be debt free (esp on their homes) as soon as possible. Also, since funding for banks and HFCs is mostly on a floating basis (and can be likewise repaid without any charge), there is very little justification for a lender to charge a fee if the customer decided to prepay a loan. In any case, with growth rates in the home loan business being 30% p.a approx, funds paid back can always be deployed again fairly easily. The RBI is also looking at this issue seriously as it has received several customer complaints on high prepayment charges (we believe the normal market range is a flat fee of anywhere between 1% and 5%).

In this context, today's letter to the Ask Mint Money column is quite shocking - a customer has written in saying that he has a home loan of 8 lakhs and wishes to prepay 4 lakhs. But the HFC is asking him to pay a 10% service charge and 2% in admin charges. This seems incredibly high - and at face value works out to a 48,000 Rs prepayment fee !!!

Link to Mint Money article

Information Session for Tata Vashind / MHFC loans

Re the Tata Housing project at Vashind (esp regarding our quota of 208 flats for financially excluded families), MHFC is organising an Information Session on Sunday, 24 October 2010 in Thane.

The event will be an all-day information session (from 11 am to 5 pm), where anyone interested in finding out more about MHFC and the Tata Shubh Griha Vasind project can stop by and speak with the MHFC team. Interested individuals can also begin the application process at the event itself.

The address for the venue is as follows:
Shiva Krupa Building, Ground Floor Mangal Karyalaya
Near Thane Station, Platform No. 1
Behind Waman Haripethe Jewelers, Thane

Tata Housing - Vashind project

Tata Housing has just launched its latest "Shubh Griha" project - which is aimed at urban lower income families - at Vashind, which is 5 stops from Kalyan. The allotment for the homes (which are priced at 5.7 lakhs for a 1 RK 360 sq flat and 7.8 lakhs for a 1 BHK 489 sq flat) is on a public lottery basis as applications are expected to far exceed supply - for eg on the last project at Boisar in 2009, Tata Housing received 15000 applications on the 1500 flats that were on offer.

The lottery system does not discriminate between actual end users and investors and hence this time around, to ensure that homes go to those who need housing, Tata Housing has kept aside a special quota of 208 flats (120 1 RK flats and 88 1 BHK flats) for MHFC customers - urban lower income families who are buying homes to use as a primary residence - especially those who are financially excluded.

The project looks appealing with lots of green spaces / hospital / school - and seems to be a good opportunity for an LIG family to get a good quality house from a top name at an affordable rate and with financing (from MHFC).

For interested buyers who fit our target market (who are buying as a primary residence and are generally excluded by mainstream banks), please feel free to contact us on 22660427 / 22660069. For information, MHFC will allot on a first come first served basis.

Link to Tata Vashind Shubh Griha video

ET Insight TV show on affordable housing

Links to an ET Insight programme on affordable housing, which covers most of the projects we are working on - also has some comments by Madhu.

Individual links to each part of the show:

Part 1

Part 2

Part 3

Mint article on affordable housing

Mint article today (Sep 10) on affordable housing (see link below) makes the point that actual end users are being left out by rising prices and their inability to compete with investors. Our quote that we are nervous about rising prices is not totally accurate though. Obviously since MHFC's primary objective is for homes to be priced within the budget of LIG buyers (defined by us as being monthly family incomes less than 15,000 per month), it is certainly not good news for flats to be priced more than 8 lakhs. Esp if our loans are capped at 6 lakhs - as this would mean that if prices increase say 25% - from 8 lakhs to say 10 lakhs - our customers will have to bring in 100% more in terms of own contribution (from 2 lakhs to 4 lakhs). This would be extremely difficult. But rising prices is a market reality and in a way we are not nervous about it, as it hopefully would mean more developers entering this segment. What this end of the market really needs (other than financing support from institutions like MHFC) is increase in the supply of homes - and for this, the biggest incentive for developers is attractive margins.

The bigger issue is whether we can and whether we should restrict sale of flats (which are priced at say sub 8 lakhs) to only end users and keep out investors completely. MHFC has a policy of only financing end users - we do not support investors. But there is certainly no major incentive for builders to restrict sale to only end users. From many perspectives, a sale to an investor is easier and quicker (as generally investors are well informed and would have tied up financing upfront as against our segment which is buying a home for the first time and often have financing problems). While the quote in the Mint article from the Director of Knight Frank is true - that “Investors help a developer maintain his cash flow, and that is still important”, I think it is meant to be viewed against his earlier statement that “If a developer doesn’t get enough end users to buy the flats, then construction will not proceed." In our opinion, its about directed marketing. It may take a little more effort but we think that if end user segments are aware of such projects and aware of available financing, then demand can be fulfilled as quickly, and once financing is tied up, end user buyers will be as reliable as investors. MHFC is already involved in such directed marketing - working with NGOs, MFIs, large employers of a quasi informal nature (like cable TV companies, taxi companies, industrial units, etc) - and are even in discussions with developers on creating a reservation for end users, which will be supported by us. We believe that not only is this crucial from a social perspective - but any long term minded developer would create a stronger brand by focussing on the actual end user and not the speculator.

Mint Article

Bangalore projects

Its an exciting time for housing projects aimed at the lower income segment in Bangalore. 2 new builders have entered this space (first time projects for both builders but believed to be be looking at this as a pan Indian business). The 2 projects are located in the Anekal area - close to Electronics city and also industrial areas on the Hosur road.

1. Value Budget Housing Corp (VBHC) - promoted by Jerry Rao (ex Citibank and Mphasis). The project launched on Aug 18 and in our mind, this offers very good value but not sure the pricing is low enough for the MHFC target group (which typically earns about 10,000 to 15,000 a month and can probably afford a house of about 5-6 lakhs max). In the 1st phase, the cheapest flat on offer at VBHC is about 8.2 lakhs (incl all taxes and charges) for a 1 BHK - the studios when offered will be about 5.5 lakhs. I think this pricing might be more attractive for young professionals working at Electronics City.
VBHC website link

2. Janaadhar Shubha - promoted by Ramesh Ramanathan (coincidentally also ex Citibank). While overall about 1140 flats will be developed, 1st phase will offer 520 1 BHK units (400 sq ft each) at about 5 lakhs each. This would seem to be affordable for the MHFC type of audience.
Janaadhar website link

It will be interesting to see how these projects are received by the segment it seeks to address - hopefully it will be very successful and result in further projects from the same builders and also from other developers who would be incentivised to come forward and build for this market.

Ahmedabad - Dhul Dhoyas

interesting news story on an unusual profession - the gold "dhul dhoyas" of Ahmedabad - they pay about 6,000 a month for the "privilege" of sweeping gold from the streets of the gold markets (Manek Chowk and Ratan Pol) - and earn about 15,000 a month from selling this to wholesale buyers of gold dust - they even buy the clothes of the gold labourers (some of whom are MHFC clients) who dont change their work clothes for weeks and then exchange it for cash and new clothes from the dhoyas.
Mint Article

Credit Camp for DBS / Saath customers

Link to write up and video of the credit camp for Saath customers of the DBS Umang project in Ahmedabad (held in June).
http://dbs.avbodh.org/creditcamp.aspx

World Social Business Day - Pics

Worldwide Social Business Day

Summary of our discussion on 24 June 2010 here

recent coverage in mint

World Social Business Day

For the last year and a half, we have been involved in setting up Micro Housing Finance Corporation (www.mhfcindia.com) - a company that provides micro-mortgages to the urban lower income group especially those from the informal sector. Today we have given home loans to about 250 customers (amounting to about Rs. 10cr) from diverse professions - vegetable vendors, taxi-drivers, electricians, plumbers, office-peons, house maids, etc.

Though our product is quite different from that of microfinance, the underlying principle is the same – just because poor people do not have formal documentation, does not mean they are not credit-worthy. Prof Muhammad Yunus has been the father of microfinance – both intellectually and as a practitioner – he and his team gave the first few microfinance loans in Bangladesh over three decades ago. Today the ‘Grameen Bank’ has helped millions around the world rise out of poverty. More recently Prof Yunus has introduced a new concept of ‘Social Business’ – a for-profit business aimed at solving a social problem. It does not pay dividends or returns to its investors - the investors only get back their principal investment. He often says ‘The Charity dollar has only one life, the social business dollar has infinite lives’. He believes this is really the way forward in attracting more capital to solve social problems.


The Grameen Creative Lab has decided to celebrate Prof Yunus’ birthday – 28th June 2010, by doing an around-the-world digital conference to create more awareness about the concept of Social Business. The digital event will aim at the following


- Celebrating the Birthday of one of the most honorable persons worldwide

- Using the momentum of the publication of Prof. Yunus‘ new book “Building Social Business“ to spread the idea of social business around the world and initiate concrete action

- Worldwide consecutive celebrations of Prof. Yunus‘ 70th Birthday according to time zones

- Connection of and reporting on celebrations through internet and social media

- Social Business ideas will be given as birthday present to Prof. Yunus

- Connecting the international hubs of Social Business

- Invite people all over the world to participate and involve themselves



Prof Yunus has been a great source of inspiration for all of us at MHFC, and so we have volunteered to organize the Mumbai chapter of this digital event – this would involve a brainstorming session (not more than a couple of hours) on ideas for new social businesses which would then be compiled into a short presentation. This would then be sent to the Grameen Creative Lab on 28th June 2010.

I understand this is very short notice and everyone is really busy. It will be difficult to get everyone at the same place at the same time, but I think it will be great if we can spare a couple of hours some time next week to sit down and brainstorm on social problems and their potential solutions.

For your reference I am attaching some material on two Social Business pilots that are being implemented across the world (BASF Grameen – Bed nets and micronutrients to decrease the incidence of malaria and malnutrition in kids in Bangladesh, Grameen-Otto – a textile manufacturing company to provide employment to the poor and improve their living conditions). Social Business Pilots


Please let me know if you are interested in joining us for this event. We are still in the process of working out the logistics, and will let you know the date, time and the venue as soon as possible. In the meanwhile it would be great if you can start thinking on the lines of ‘The social problem I would like to solve’, ‘My idea for the next social business company’, or ‘Why Social Business inspires me’ and send your ideas across to us – this will help us have a more productive session when we meet.

Please feel free to forward this to your friends/colleagues – the more the merrier!

C ben

Last week we held a credit camp for the Saath customers of the DBS "Umang" project in Ahmedabad (almost 50% or about 150 bookings have been reserved for Saath customers who are typically from the LIG informal sector). It was inspiring for us to meet and listen to their stories - in terms of how they have struggled to make a living despite very difficult conditions, and now that they feel fairly settled monetarily, they would like to take the next step in buying a permanent home. The customers we met ranged from a family of tailors, to vegetable vendors, to maalis and waiters. But 1 couple stood out. The husband was fairly quiet, and the one who did all the talking was the wife - "C" ben. She worked at an NGO - for over 15 years - earning about Rs 5000 per month. She also gave tuitions to slum children for 2 hours every day at a programme organised by IIM Ahmedabad - earning another Rs 2000 per month. Her husband was a driver - working for about 16 years for 1 employer - and was earning about Rs 6000 per month. Total family income was about 13,000. They had made a booking for the bigger 2 RK flat (which cost about Rs 6 lakhs) and sought a loan from MHFC of about Rs 5.5 lakhs. While in any case this was not a possible loan from MHFC as we require a 20% client margin (1.2 lakhs), in any case the EMI (approx 7,000) would be unaffordable for the family from our point of view. We advised that we could not support her request, but would happily support if they bought the smaller 1 RK flat (which cost about Rs 3.5 lakhs). Initially, they were not very pleased and we had a long discussion on the affordability. But eventually she also realised that buying the larger flat would place a huge financial pressure on the family. Finally, she agreed to switch to the smaller flat and take a smaller loan of approx Rs 3 lakhs and pay an EMI of approx Rs 4,000 - but not without trying to negotiate for everything - the down payment required, the loan tenor, the pricing !

Growth addiction

The month of May saw major events at MHFC. Our first customer was one year old, and had successfully repaid 12 installments on time. Also for the first time ever we sanctioned 50 new customers in a month. We celebrated both events, and have set our sights on a target of 100 new customers for next month.
While we could easily get addicted to the growth, it is important not to lose sight of the commitment of our customers that ensures the quality of our portfolio and our ability to help many more....

DBS Housing Blog

link to blog by Bala, Director, DBS Affordable Housing - it has information on the launch of the project in Ahmedabad - which saw about 2000 visitors on opening day.

http://dbscommunities.blogspot.com/

New Project - Ahmedabad - DBS

We met with DBS Housing on Friday. This is a new company - formed by a team of professionals who are passionate about creating homes for lower income families. Their approach is bottom up - in that their plan for a township in Ahmedabad (near Vatva) is based on views from the community - and after a lot of research on needs of expected end users. In fact, they have a tie up with Saath (http://www.saath.org/saath/index.php) which works very closely with communities in Ahmedabad slums to provide integrated solutions in health, education, basic infrastructure, job training etc - and who will spread the word on this project. This is exciting for us as it will probably ensure that buyers on the project will be mostly end users from our target segment - lower income families from the informal sector.
The project opens on May 2 - about 1400 flats (1 RK, 1 BHK and 2 BHK) on offer - price range starting 3, 5, 7 lakhs in each category. It has been conditionally approved by MHFC - final approval will be after receipt of all planning permissions. Our LOs will be on site for the opening to take details of prospective buyers.
More details on DBS and the project on their website - link below:
http://www.dbsaffordablehomes.com/index_files/Page304.htm

Samruddhi - Poddar Developers - update

There has been a good response for the project in that 600 bookings already made - within a month of launch. However, of this, most bookings are for the 1 BHK category (which was priced at Rs 4.5 lakhs) and less for the 1 RK (priced at Rs 3.5 lakhs). In fact, the surplus bookings for the 1 BHK category have meant that (a) it will be closed quite soon as it seems that only Phase IV flats left in this category and (b) the builder has raised prices to between Rs 4.65 and 4.95 lakhs, depending on the floor. For the moment though, the 1 RK prices have been retained at Rs 3.5 lakhs and the builder has also set up a sample flat at site for viewing in order to generate interest (until now only the 1 BHK sample flat was ready). We still do not have a clear idea on the proportion of investors to end users but MHFC is certainly trying to spread the word among the latter segment so that they come forward to book a flat in what is probably a reasonably affordable project, even for those earning between Rs 8-10,000 Rs per month (the EMI on a Rs 2.8 lakh loan - after the 20% client own contribution of Rs 70,000 - will be approx Rs 3,700 over 15 years).

3 New Approved Projects (Mumbai)

MHFC has just approved 3 new projects in and around Mumbai:

1. Samruddhi Complex - by Poddar Housing - this is opp Bhivpuri railway station (one stop before Karjat on the Central line) - will be a township of about 1300 flats - launch price for the 1st phase is 3.5 lakhs for 1 RK and 4.5 lakhs for 1 BHK. Bookings have not yet opened - will open on Gudi Padva (March 16) but given the price and the several features on offer, we expect this to be sold out quite fast.

2. Star City - by Rashmi Housing - at Naigaon - which is 1 stop after Bhayandar on the Western line (3 stops befor Virar). This is also a is a fairly large project - over 1000 flats - more expensive given the attraction of this side - about Rs 2000 per sq ft - which means flats are between 5.7 and 11 lakhs - booking is already open - about 200 flats left for sale - rest all sold.

3. Sathyanagar - by Shriram Housing - at Boisar - which is frankly not practical for those working in Mumbai as it is about 3 hours by train from VT - but just for information, this is a township of about 2800 flats - 1 BHK and 2 BHK flats being priced at between 5.1 and 5.9 lakhs.

For more information, please email on contact@mhfcindia.com and for builder brochures / websites, please see http://www.mhfcindia.com/approved-project.html

Karjat Visit

We visited Karjat last week - Karjat is about 2 hrs from CST on the central line, however, soon local trains would start running on the harbour line track which will reduce the commute to about an hour and fifteen minutes. As a result a lot of developers have started looking at Karjat to launch new affordable housing projects.

We visited three such projects - all at an early stage; two of them are yet to start construction. But we were quite happy with the price dynamics in the area. As of today, land is quite cheap, and thus a 3.5-4.5 lakh 1-BHK is still feasible. This is great news for a lot of people who earn between 8-15k per month and can afford an EMI of 3-4k per month. While we understand it is difficult to move to Karjat today as it is quite far from the heart of the city, it is a great opportunity to buy a home of your own for later, once good quality infrastructure develops in the area.

In our view, Karjat has the potential to be the Virar of the central line - roughly same commute from Churchgate/CST (once the new line is operational) and much cheaper properties.

All three projects are currently being reviewed by the project approval committee, more details will follow once they are approved. (Tentative launch date - Gudi Padwa - 16th March)

Hyderabad

We visited the Andhra Pradesh Housing Board ("APHB") last week in Hyderabad / Kukatpally after it announced the allotment of 1046 flats to the LIG segment - for more info on the project, see http://www.aphb.gov.in/Notification_WD.html.

As discussed in earlier posts, the biggest developer for EWS /LIG segments is the state (mainly through municipal corporations and housing boards) and in general, flats built by the state not only are good value (since there is an element of subsidy) but also generates a strong response from actual users. In the case of private developments, there is usually no screening of buyers - both in terms of income or actual users - so often the buyers are investors from higher income segments, not the group in which MHFC is interested.

Coming back to the APHB, we visited the site at Kukatpally which was very central and seemed prima facie attractive (right next to the site was a private development coming up at a rate / sq ft approx double that of the state project). We also met with officials and inferred from discussions that there were several allottees who were finding it difficult to raise financing for precisely the reason that MHFC exists - because the allottees lacked documentation and could not qualify for loans from mainstream banks. We hope to help these allottees and also help buyers on other housing board projects coming up in other cities and towns in Andhra Pradesh (over 5,000 "Siddhi" flats for the urban lower income segments to be offered in 2010). We felt that if we spread the word (that there is an institution like MHFC to support the informal sector) early, then the response to the state projects, while already strong, might be enhanced as more from the informal sector would come forward and apply for an affordable home.

Demand for EWS / LIG - new projects sold out

Re the Sanskruti apartments project (see blog post dated Dec 19, 2009), for 67 flats - this has already been sold out (in less than a month of being on offer - even without any real marketing by the builder / agent) - another sign of the demand for clear title, decent quality homes in the Rs 5-7 lakh price range in the Virar area.

Also, in the latest MHADA round (for sale of 3394 EWS / LIG homes), which closed Jan 31 - the total applications received are about 3.3 lakhs - or over 100 apps recd for each flat on offer.

For more info, see link below:
TOI article on MHADA sales - Jan 2010

pune project launch

I think the biggest learning for us has been the lead time taken for a project - from initiating discussions with builders, waiting for final drawings, land acquisition and and plan approvals to the actual launch of the project.

But pune was slightly different - particularly Sachin and Nitin of Vastushodh developers. Right from our first meeting to the final project launch (a period of less than 3 months), we were really impressed at the amount of thought and research that was put into the planning of 'Anandgram'. Obviously they had the benefit of studying earlier projects in low-cost housing, but full credit to them - it was a very methodical and a professional effort.

('Anandgram' is a low-cost housing project coming up near a small town called Yavat - about 40km from Pune city on the Pune-Solapur highway. It is well connected by bus and suburban trains to Pune (35 min train ride to Pune station). The project is about 2km from the Yavat railway station and just off the main highway. With good connectivity to Pune city, and priced between 3.5lakh (1 Room Kitchen) to 6.5lakh (2 Bedroom Hall Kitchen), it offers great value for money.)

The launch of 'Anandgram' was held couple of days back on Friday. Ads in the local papers and jingles on radio stations attracted a lot of people to the site, the builder had organized free transport to and from the site for the convenience of prospective buyers.

We were present on all three days of the launch - in fact we went a day earlier to set up the MHFC stall. On Friday we had one loan officer at our stall, but due to the overwhelming response we sent two more for Saturday and Sunday.

Overall it was a successful launch, a substantial part of the project got sold out in the first three days and also quite a decent percentage of the clients were from the informal sector. I think we would have a better idea on the profile of the people who visited/booked in the project in a couple of days (after collating the data collected by the loan officers at site). so more to follow on that...

Mumbai Marathon - MHFC running for MMC

On Jan 17th, the entire MHFC team will be running in the Mumbai Marathon (despite the fact that some of us shouldn't even be jogging) - all for a good cause - to raise money for Mumbai Mobile Creches - an NGO which looks after children on construction sites (for more info, please see http://www.mumbaimobilecreches.org/)
No pressure at all - as we know that many of you already support other organisations - but it would be great if you could help make a difference to MMC's work and add a contribution to the funds we are collecting by writing a cheque in favour of "Mumbai Mobile Creches" and mail to us at:
Micro Housing Finance Corporation
#3 Victoria Building, 1st Floor
S A Brelvi Road
off Horniman Circle, Fort
Mumbai - 400001
For those of you who are tax conscious, there is good news. You will get an 80 G tax exemption on your contribution. When else will you get an opportunity to make us run and also let the Indian Government pay for the privilege ?