"After studying houses built in Manila using this technology, we are fairly confident about it," says Nikhil Naik, Chairman, Erdene Infrastructure, which invests in infrastructure and specialty housing projects. It has invested Rs 131.2 crore in the project.

"Besides saving on material costs (bricks, cement, plastering and masonry can largely be done away with), the other advantage of this technology is that it slashes construction time to one-fourth the normal duration, without compromising on quality," says Taylor. Sterling has been using this technology since 2000. There are savings on masonry work and the construction is environment-friendly as it eliminates the use of bricks. "Construction cost savings could be to the tune of 15-20%, compared to conventional construction," says Salman Sayeed, Vice-Chairman and Chief Technical Officer, Sterling Constructions.

The first prototype at Karjat will be ready by May. The initial phase of the project will see 10,000 houses built over 12 months. Later, based on the success of this phase, Matheran Realty plans to look at other such options along the suburban railway lines in Mumbai, but only in the outskirts.

Huge potential
"About 52% of people in Mumbai live in slums. Not just taxi drivers and vegetable vendors, but even office staffers," says TS Hariharan, President, Matheran Realty. "All of them dream of owning a house," he adds. Many such families have incomes in the Rs 10,000-per-month range and could manage to pay the Rs 3,000-Rs 5,000 monthly instalment on a loan taken to purchase one of Matheran Realty's low-cost houses.

But good quality, low-cost housing has been hard to come by thus far. Since its inception in 1977, the Maharashtra Housing and Area Development Authority (MHADA), which was formed to create affordable housing for the lower- and middle-income groups, has built merely 213,00 houses (data till 2001). Even this has involved various controversies, including allegations of poor construction, MHADA favouring builders backed by politicians, and giving out land to family and friends. According to estimates at the start of the 11th Plan, the total housing shortage in the country was 24.7 million, out of which 14.1 million was in rural areas and 10.6 million in urban areas. Even the private sector has largely been reluctant. "With land costs in the city being high, unless the government gives subsidised land, how can we build low-cost houses?" says Ali Lokhandwala, Director, Lokhandwala Infrastructure. But a few companies sense a business opportunity.

"Low-cost housing is a high-volume, low-margin business," says Ashwin Ramesh, Principal, Primary Real Estate Advisors. "Here, one would have to use different technology to bring down costs and make it viable," he adds. But it is this unique use of technology and the idea of locating large settlements of low-cost townships in the far, but well-connected, outskirts of big cities that makes the experiment in Karjat compelling.

The twin innovation
Karjat is also in the vicinity of several high-employment, industrial clusters like Patalganga (10 km away; home to Reliance Industries' polyester plant and employing 5,000 people) and Taloja (26 km away; has factories of Hindustan Copper and Indal, among others). More like the Mukesh Ambani-led Navi Mumbai SEZ (20-25 km away; expected to employ two million people in the next 10 years) and Indiabulls' 6,000-acre SEZ in Raigad district (about 20 km away) are coming up. The new international airport to be located in Navi Mumbai, too, is only 23 kms away. "All these factors will drive up demand for housing in Karjat," says Hariharan.

The model could be replicated in other cities too. For example emerging auto hubs like Maraimalai Nagar and Thiruvaloor--both in a radius of 50 km from Chennai and connected by suburban rail--could be the next stop for similar solutions. In Delhi, areas like Ghaziabad and Meerut, about 50-70 km away, could well be the answer. "Low-cost houses have to be built in places that are a generator of employment," says Sourav Goswami, Managing Director of private equity firm Walton Street Capital, which focuses on real estate. Walton has tied up with Shriram Properties and Starwood Capital to develop a 314-acre township in Kolkata, a part of which will be dedicated to low-cost housing.

Designing small houses also presents a space challenge. "Aesthetics is a challenge," says Amit Kulkarni, of Edifice Architects. "Low-cost structures use different construction methodologies. There is no plastering and, at times, recycled materials are used."

Identifying a cheap, yet strategic, location is only the first step. Technology innovations in materials and construction cost are also required to keep prices under the psychological Rs 999 per sq ft mark.