India looks to build much-needed low-cost homes in Mumbai, but challenges persist

MUMBAI: Labourer Joginder Kumar lives in his father-in-law’s cramped home, located in a slum on the outskirts of India’s most populous city.
He earns less than US$200 a month – a meagre salary that must sustain his wife and child as well. He also cannot afford to rent a place for them, let alone buy one.
“I have medical and other expenses to take care of. Groceries are becoming more expensive by the day. How can we manage? Whatever I earn is used for our basic needs,” he told CNA.
Mumbai, where Kumar lives, has become the country’s most expensive city for housing. Indians have long flocked to the commercial hub for work opportunities, leading to a booming population of more than 21 million people.
Purchasing a home has now become out of reach for many citizens there who earn an average of US$650 a month.
According to property firm Square Yards, average home prices in Mumbai rose 10 per cent on the year in the second quarter of 2024, hitting about US$112,000.
Analysts said this has forced millions of residents like Kumar to live in squalid slums.
Now, Prime Minister Narendra Modi’s government plans to create thousands of low-cost homes for Mumbai residents as part of efforts to provide more affordable housing in major cities.
However, developments have been hit by rising costs and limited land.
Over the next five years, the government intends to invest almost US$120 billion to address the housing needs of 10 million poor and middle-class families.
The ambitious initiative is an expansion of the Pradhan Mantri Awas Yojana scheme in 2015, a credit-linked subsidy scheme which aimed to provide “pucca” houses – permanent, well-constructed homes – to all city dwellers by March 2022. That target was not met.
“The issue is because the scheme requires both central and state participation,” said Ajay Sharma, managing director of real estate agency Colliers India’s valuation services team.
“If you look at the total investment committed and the total released amount or sanctioned amount, you’ll see that the central government has actually done its bit, but the states are lagging,” he added.
Among the developers building low-cost homes under this scheme is the Suraksha Group, which is constructing a high-rise township called Vasai in the far-flung suburbs of Mumbai.
Low-income buyers have been able to purchase a 30sqm one-bedroom apartment for US$24,000 there. The government provides these buyers with subsidies, while incentivising developers by allowing them to construct more densely so they have more property to sell.
Suraksha Group has said the first phase of the township, comprising 7,500 apartments, is almost sold out – even if the development is far from the city centre.
Company spokesperson Jash Panchamia said that such buyers from low-income backgrounds tend to look at smaller developments where houses are more affordable.
“To buy their first house with all possible social infrastructure and lifestyle amenities would be a dream come true, so that is how we conceptualised (it),” he added.
Mumbai’s housing authority has told local media that it plans to add 50,000 more affordable homes in the city over the next five years.
However, analysts said there are major challenges in building low-cost housing, including high costs and limited availability of land. Rapid urbanisation across India also means that more budget properties will be needed in many of the major cities.
Figures from the World Bank showed that about 36 per cent of India’s population live in urban areas.
The government has estimated that this proportion will rise to more than 40 per cent by 2030, underscoring the need for significant progress in creating more affordable housing.