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    Real estate sector needs Rs 1 lakh crore over the next one year, says Niranjan Hiranandani

    real estate | IST

    Real estate sector needs Rs 1 lakh crore over the next one year, says Niranjan Hiranandani

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    Ever since Finance Minister Niramala Sitharaman announced that the government was considering a stimulus package for home-buying, speculation has been rife on what kind of stimulus the Government will provide to the real estate market.One of the pet demands from the sector has been a stress fund to help bail out incomplete projects that have been stalled owing to problems of liquidity. The question, however, has remained: how much is enough?

    Ever since Finance Minister Niramala Sitharaman announced that the government was considering a stimulus package for home-buying, speculation has been rife on what kind of stimulus the Government will provide to the real estate market.
    One of the pet demands from the sector has been a stress fund to help bail out incomplete projects that have been stalled owing to problems of liquidity. The question, however, has remained: how much is enough?
    “The amount of funding looks large,” said real estate baron, Niranjan Hiranandani, the co-Founder and MD of Mumbai-based Hiranandani Group, in an exclusive chat with CNBC-TV18. “If we provide Rs 50,000 crore every six months for next 12 months, we would have a solution for 70 percent of the projects,” Hiranandani added, “Then there is the 30 percent, which is beyond redemption, where even if you put in money you won’t find a solution.”
    The importance of a stress fund, according to Hiranandani, is apparent in the Noida and Greater Noida property market, where the real estate mogul points to over 2.5 lakh under-construction homes that are stalled owing to the real estate liquidity crisis. However, he is quick to emphasize that there is more, which needs to be done, to revive the industry — like tweaking the provisions of the National Infrastructure Investment Fund.
    “All that needs to be done is make a change in the fund regulations, which say it’s for infrastructure; we need to add ‘real estate’ to it, which means we can access a large amount of fund,” said Hiranandani.
    Another measure he feels could help the sector tide over the slowdown, is the need to change the definition of affordable housing. At present, the Government of India considers a unit with a price tag of Rs 45 lakh as ‘affordable’. “We need to remove the price-cap while defining affordable housing and focus only on project size,” said Hiranandani, “We don’t know why some bureaucrat thought Rs 45 lakh was a suitable benchmark for affordable housing, when it makes no sense for projects in Delhi, Mumbai & Chennai.”
    Hiranandani has long been advocating increasing the price-cap of Rs 45 lakh to Rs 1 crore, so as to allow buyers of these homes to benefit from Government rules concerning affordable housing. This in turn could spur buying and resuscitate a stagnant housing market.
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