It looks like Tata — the company behind the $2,000 Nano car and India’s no-frills Ginger budget hotel chain — wants to market the 1,244 low-cost homes it will build outside Mumbai to the working poor. These security guards, drivers, factory workers, and clerks now populate the city’s slums and other low-rent housing. Tata’s new tiny studio and one-bedroom apartments will range from about $7,800 to $13,400 and will be between 218 square feet and 373 square feet.
I just got off the phone with Tata Housing Managing Director and CEO Brotin Banerjee in Mumbai, who gave me some more details.
The company will start work in about a month on its first low-cost housing project in the industrial area of Boisar, about 60 miles or 2.5 hours by train from Mumbai (Long commutes are common in the city, which has horrendous traffic). Tata plans also to roll out similar projects in major cities across India. The idea is to target the bottom of the pyramid — the largest group of consumers — now largely untapped.
In addition to the low-cost housing, Tata will build more than 2,000 units on the same 60-acre development for $20,000 to $40,000. Banerjee said having the higher-cost housing would make the overall project more profitable.
“There’s a shortage of 24 million homes in India and the bulk of them are in urban areas,” Banerjee said.
The project will consist of three-story cement buildings with 6 homes on each floor. The development would have a hospital, schools, community center, and parks.
Banerjee said he hopes other large developers follow Tata’s lead.
“If larger players enter the field, it will only be good for everybody,” he said. “There’s enough demand and I don’t see very much competition in this space.’
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.