1. Expansion and Growth in Affordable Housing Markets NHB-AUF International Conference New Delhi- January 30, 2012

2. Presentation path About Us Housing Marco Statistics: Demand-Supply Mismatch Addressing Supply Side Constraint is a large Challenge Key Pressure Points Some Suggestions on Increasing Demand Side Conclusion

3. About us Value Budget Housing Corporation (VBHC) is a professionally managed real estate company Construction of Affordable Entry Level Homes (AEL), priced range of Rs. 5 to 15 lakhs, building self contained communities in suburbs/urban periphery Marquee Investors whose direction to VBHC is in delivering Quality Homes, at an Affordable Price, Transparent Sales Process and Reasonable Returns Essence of Planning is to Experience the Joy of Living Investment Thesis: Industrialization of construction is key to address the supply side challenge and achieve balance between price, quality and speed of delivery Application of Industrial Building Systems and building of trained skilled labour force

4. Acute shortage of housing in India Housing shortage in India expected to be over 26 million units by 2012 (Source: KPMG). Over 90% of this demand is in the 300 – 800 sq ft size category (defined as EWS and LIG).

5. Industrial building systems (IBS) at VBHC Standard prototype of apartments and buildings, use of BIM for acceleration in design process Offline completion of bar bending, steel mesh, electrical and plumbing kit Cast In Situ, reusable Aluminium mould for completion of structures High quality design with high emphasis on sustainability measures Current speed, initial phase of 30 apartment every month, currently 90 apartments, plan to achieve140 apartments completion every month

6. 6 Key supply side challenges I – Offsetting Input Cost Increase Increased cost of most inputs driven indirectly by energy cost Cascading effects on adveloram charges including higher circle rates Labour cost both skilled and unskilled Higher transportation costs IBS application offer substantial opportunity to offset input costs through productivity improvements Cycle time reduction: progress from conventional construction-in-situ to precast Sweating fixed assets, lowering period costs, lowering cost of capital Technology progress will provide more options on material substitution, productivity gain to offset input costs 6 Material2011 cost (2009 cost indexed to 100) 2011 cost (2010 cost indexed to 100) Steel150120 Cement160130 Energy130115 Cycle time (days / casting) Completion time (months) 330 222 114

7. 7 Key supply side challenges II – Approval Lead Time Prior history on non complaint behaviour on the part of builder community Uniform bylaws will promote standardization and lower costs Bylaws ambiguous, need for an appellate authority for appeal and early disposal Density rules can be improved based on empirically established data – buyers are young, nuclear families Bylaws can be improved leading to more efficient design and loser costs Long approval time lines, adds ~15% of total cost Biggest opportunity is to focus on aspects that are costs to the consumer but not revenues loss to the Government 7 ActivityTime taken (months) Approvals12* Construction18 Idle time to construction time ratio40% * Receipt of Occupancy Certificate (OC) takes an additional 4-6 months

8. 8 Case study: Variation in bylaws across the country (1/3) Bylaws vary between cities in critical design requirements impacting modularity and standardization Some of the bylaws which determine the Master Plan are: FAR/FSI - Ranges from 0.75 to 2.25 Setbacks - Ranges from 6m to 8m for a building of 30m height Distance between buildings - Ranges from 1/2 the building height to 1/4 the building height Fire driveway requirements - Ranges from 3.6m to 8m Open space requirement - Ranges from 10% to 25% Some of the bylaws which determine the Building Design are: Minimum room sizes – Ranges from no min. size specified to 9.5 sqm for bedroom Ventilation shaft requirement - Ranges from 4 sqm to 8 sqm for a 30 m high building Fire distance within buildings – Defined from the exit door or from furthest point in the unit Requirement and location of fire stairs – location, number and design req. varies Minimum window sizes - Ranges from 10% to 20%: Parking requirement – Based on plinth or FSI area. Floor area ranges from 50 sqm to 75 sqm 8

9. 9 Case study: Variation in bylaws across the country (2/3) 9

10. 10 Case study: Variation in bylaws across the country (3/3) 10

11. 11 Key supply side challenges III - access to capital and funding 100% Equity required for land purchase at project Level. ECBs permitted for large township. Scope to provide flexibility for Affordable Home Projects Long-term finance for purchase of equipments Working capital funding, real estate considered in negative category, stressed portfolio also leading to conservative standards A more favourable environment for access of funding of projects... will also lower delivery risks to customers 11

12. Customer profile (1/2) Note: customer profile is based on data collected from over 1,000 customers of the Bangalore project

13. Customer profile (2/2) Majority of the customers are young (less than 40 years of age) professionals 20% of customers are women 50% of customers currently live in rented accomodation Modal customer earns between INR 3 – 7 lacs per annum Income Distribution Note: customer profile is based on data collected from over 1,000 customers of the Bangalore project

14. 14 Demand side intervention Key is to encourage long term investors such as insurance and pension funds in organized rental market Young workers in our industrial corridors Not ready to make decision to purchase Rental / shared accommodation Companies willing to provide guaranteed long term lease Part purchase and part funding, option to purchase the balance property Individual, Social Sector, Philanthropy willing to guarantee facility to support access to mortgage loans on prime rate 14

15. Demand side intervention Guarantor, Dr. D.V.R. Seshadri is adjunct faculty of Marketing at the Indian Institute of Management – Bangalore. Beneficiary: Mrs and MrUshanNaika, housekeepers for Dr. Seshadri with a combined income of Rs 15,000 per month. Property: 1 BHK flat, total cost Rs 8.82 lakhs. Loan availed Rs. 7.5 lakhs, EMI Rs. 8,132. Guarantee: Is redeemed on reaching certain trigger event such as seasoning and LTV ratio Program on Cloud, Opportunity to build an institutional portfolio with individuals and social institutional investors 15 Demand side intervention: Example of Guarantee Program 15

16. Thank you