Santhosh Kumar, Group Vice Chairman
India’s urban affordable housing deficit currently stands at 9.4mn units. By 2030, that number is projected to reach 30mn. These figures are cited frequently. They are rarely interrogated. Behind the numbers sits a more uncomfortable reality, one that policy incentives alone cannot resolve.
The conventional diagnosis points to insufficient supply. Build more, the argument goes, and the gap closes. That framing is too simple, and acting on it exclusively has cost us two decades of misdirected effort. The real constraint is not the number of units, but where viable land sits, and what it costs.
The numbers tell a stark story. The supply-to-demand ratio for affordable housing across India’s top eight cities has plummeted to 0.36 in 2025, down from 1.05 in 2019. A few years ago, developers launched more affordable units than were sold. Today, launches have collapsed to barely one-third of demand.
CREDAI, which represents over 15,000 developers nationally, has noted that the share of affordable housing in new launches dropped from 26% in 2021 to just 17% by 2024 , a structural withdrawal by the private sector from an economics that no longer works for them.
The capital flows confirm it. According to our research, residential projects captured only 17% of total private equity investment in Indian real estate in FY26, against office at 38% and mix-use at 22%. Residential deal activity moderated to 26 institutional transactions across the year, at an average deal size of approximately $25mn. Crucially, the report notes that bank credit,not institutional equity, has become the primary funding source for residential developers, owing to its lower cost.
Land and its associated approval costs account for approximately 40% of total real estate project costs, according to a McKinsey report submitted to the Central Government. In metro markets specifically, land acquisition has escalated to 30-40% of total project cost, up from historical norms of 15–20%.
At that ratio, delivering a unit priced below ₹45 lakh in a city like Mumbai or Bengaluru requires either subsidised land, cross-subsidisation from premium inventory, or margins that make the project economically unviable.
There is a structural distortion that rarely surfaces in policy debates: the mismatch between where affordable demand concentrates and where development-ready land exists. Demand is most acute in urban cores and inner peripheries. Serviced, permissible land in those zones is almost entirely absorbed by mid-income or premium development, where returns justify the cost.
Affordable projects get pushed to outer peripheries, where land is cheaper, but connectivity, employment access, and social infrastructure are absent.
What does a realistic path forward look like? Three interventions matter more than anything else.
First, monetisation of government land -Union, state, and parastatal holdings- in urban and peri-urban zones at concessional rates tied to affordable development mandates. India has the land. It simply does not have a functioning mechanism to release it at scale.
Second, FAR (floor area ratio) rationalisation and density bonuses near transit corridors. This is the single most cost-effective lever any municipal government can pull to bring down per-unit land cost without direct subsidy expenditure.
Third, restoring tax incentives for developers building in the affordable segment, as CREDAI has consistently argued, not as a welfare measure, but as the minimum economic support required to make private participation viable again.
Closing a 30mn gap by 2030 is not achievable. But narrowing it meaningfully is, as long as policy shifts from incentivising construction volume to reforming land economics. Supply will follow when the economics work.