By Anuj Puri, Chairman – ANAROCK Property Consultants
With India continuing its face-off with economic slowdown across sectors, the government is on top of its game and taking a heads-on approach to address key issues and support major sectors - including real estate – and give a shot in the arm in these stressful times. In its endeavour to address one of the major issues - of stalled projects within real estate due to fund crunch - the government, as demanded, has created a special window to provide last-mile funding requirements for housing projects that are non-NPA and non-NCLT and yet are stuck due to lack of funding. INR 10,000 crore will be contributed towards this by the government of India.
This is a major boost to the housing sector (affordable and mid segment) and a perfect festive treat for lakhs of homebuyers who have been anxiously waiting for their prized possession. However, since it doesn’t include projects that are under NPAs and NCLT, there is a possibility that not all homebuyers will get the said relief. Also, the fund is for projects in the affordable and mid segment housing only and to this effect homebuyers within the luxury segment may have to wait even further. Also, there is no clarity of the price of mid segment homes that will be included in this move. Nevertheless, this special window of funds will give many developers an opportunity to complete their stalled projects which were in dire need of capital and thus provide relief to lakhs of homebuyers across the country.
Additionally, the fact that the corpus will be completely professionally-driven including real estate experts, banking or housing finance specialists, it is likely to move more smoothly and in the right direction with little scope for misadventure. These specialists will need to identify such projects that are affordable and middle-income projects and are in need of last-mile funding for completion. The government’s move to relax commercial borrowing for affordable housing is another welcome step.
That said, these funds are not enough to give relief to the real estate sector as a whole. There are more than 5.5 lakh units that are stuck or delayed in top 7 cities alone which would be much higher if we consider all cities and towns. Besides, there were many other demands in the wish list of the realty sector including:
- Changing the price definition of affordable housing based on different cities.
- A more democratic taxation approach to under-construction and ready-to-move properties.
- All and any measures to attract long-term investors to push sales in the residential market