What is the market opportunity for precast technology in building affordable housing?

Asha Impact
Sep 27, 2018 · 4 min read

By Shreya Krishnan, Consultant, Asha Impact

The Housing Challenge in India

The Ministry of Housing and Urban Affairs (MoHUA) of the Government of India has recently announced that it is set to launch the Global Housing Construction Technology Challenge as part of the technology sub-mission of PMAY-U to kickstart housing construction in urban areas. Through this challenge, the MoHUA will invite ideas for innovations in delivering mass housing more sustainably, cheaply, and quickly.[1] This is linked to the Ministry’s Housing for all by 2022 initiative, which estimates the housing shortage in the country to be 10–12 million urban homes, and proposes building as many as 20 million houses by 2022. Many experts predict that the only way to build at the speed required by this ambitious target, is by wholesale adoption of emerging technologies such as prefab and precast, which allow developers to build homes in less than half the time of conventional brick and concrete.

Introduction to Precast Technology

Precast is not a new technology: in Northern Europe, precast has been the pre-eminent housing technology for some time, constituting more than 50% of all construction in some countries. In India, precast is steadily gaining ground: residential developers such as Tata Housing, Shapoorji Pallonji Developers, Brigade Group, Shobha and Supertech have built projects with the superstructure made completely out of precast, and government organizations such as Delhi Development Authority have called for house construction tenders with precast technology.

But underneath all the hype, what is the value proposition of, and hence market opportunity for precast and prefab in India, especially in the context of affordable housing?

Advantages of Precast Technology:

The advantages of precast technology are manifold:

  • Better finish quality and aesthetic

However, what are the key factors that will enable a newer, relatively unknown technology (i.e. precast) to replace the predominant technology (i.e. brick and cast-in-situ concrete)?

The Cost of Precast Technology: Creating a Value Proposition

The most important value proposition of any construction technology for the consumer, and perhaps the biggest barrier to widespread implementation of precast in India, is cost.

The key variables impacting the cost of precast vs. traditional technologies are:

  • Material costs (lower for precast)

Therefore, how can we create a value proposition for Precast by Reducing Costs Vis-à-vis Conventional Construction?

At this point in time, precast does not operate at the scale at which it is more cost-effective than conventional technology.

To create a favourable ecosystem for private players to use precast, the government could lead the way by means of tax incentives, assisting with initial cap-ex cost, and by training labour to understand how to work with precast to minimize leakages due to improper jointing techniques, etc.

Encouraging innovative business models that seek to make prefab and precast technologies accessible to beneficiary-led construction would also ensure a greater visibility of precast to the local, neighbourhood-level contractor who catalyzes most self-constructed housing projects.

Precast Technology and Sustainability

Precast tends to be a more sustainable way to build: it uses less cement, water and steel, and uses reusable moulds, while reducing the amount of construction waste generated at site.

The challenge is to translate these sustainability factors into a strong value proposition for the customer, in the form of lower costs. The policy establishment can play an important role in taxing the negative environmental externalities of traditional building materials, and promoting more sustainable technologies by means of incentives.

Precast = the housing technology of the future?

The moment at which precast begins to be a viable alternative to conventional housing technology has been predicted without success many times in the past five years. However, many of the conditions that precast requires (the setting up of precast plants across the country, increasing worker wages, and government intervention) have slowly been moving into place, and it is a question of when, and not if, precast will be the housing technology of the future.

Asha Impact: Profit, Purpose and Policy

Asha Impact is an impact investment platform for business…

Asha Impact: Profit, Purpose and Policy

Asha Impact is an impact investment platform for business leaders and a not-profit trust to share lessons from inclusive business models to scale development in partnership with the government.

Asha Impact

Written by

An impact investment and policy advocacy platform for business leaders

Asha Impact: Profit, Purpose and Policy

Asha Impact is an impact investment platform for business leaders and a not-profit trust to share lessons from inclusive business models to scale development in partnership with the government.

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