New Delhi (NVI): Will the government’s recent sop of Rs 25,000 crore special window to provide funding to stalled housing projects revive the realty sector that is facing worst ever slowdown in a decade? Hopefully Yes, say most of realty experts and observers.
As per the Niti Aayog’s February estimate, the Indian real estate sector, valued at Rs 8.3 lakh crore, is in the grip of one of the worst slowdowns in a decade.
A report by realty consultant Knight Frank India, published in July, estimates that unsold home inventories in eight key cities-Mumbai, NCR, Bengaluru, Chennai, Hyderabad, Ahmedabad, Pune and Kolkata-stood at 450,263 units in the first half of 2019.
The Government’s November 7 decision on Rs 25,000 crore sop for realty sector will cover as many as 1,600 projects with 458,000 dwelling units. While the government’ contribution for this will be Rs 10,000 crore, the balance will come from the Life Insurance Corporation of India and the State Bank of India, besides sovereign wealth funds and pension funds.
The units eligible for the special window will be the incomplete housing units worth less than Rs 2 crore in Mumbai; less than Rs 1.5 crore in Delhi-NCR (national capital region), Chennai, Kolkata, Bengaluru and Pune; and less than Rs 1 crore in the rest of the country.
Industry honchos have welcomed the government’s latest decision. “The funds will be used to provide priority debt financing for the completion of stalled housing projects in the affordable and middle-income housing sector, providing relief to developers with unfinished projects while also ensuring delivery of homes to buyers,” according to a statement by the sector’s Hiranandani Group.
According to a recent study by realty consultant JLL India, Delhi NCR contributed to more than 60% of delayed residential units followed by Mumbai, constituting nearly one-fifth of the overall delayed units across the top seven cities in India.
It may be noted that a host of real estate players, including Jaypee Group, Amrapali, Ansal API, Raheja Developers and HDIL are currently in resolution proceedings with lenders under the National Company Law Tribunal (NCLT). This has left many home buyers in the lurch, with homes left incomplete and monthly instalments on bank loans due.
“This will be a win-win for home buyers and real estate developers, as it will help alleviate financial stress faced by home buyers while also releasing funds stuck in such delayed or stalled projects for productive purposes,” says a statement by Hiranandani group.
According to Anarock Property Consultants, housing sales were at 350,000 units in 2014 (the highest between 2013 and 2019), but fell to a mere 210,000 units in 2017, immediately after demonetisation.