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Rs 20,000 crore stressed asset fund not enough, say realty experts

Updated : September 19, 2019 03:57 PM IST

In the fund, Rs 10,000 crore will be contributed by the central government and roughly the same amount will come from outside investors

There are more than 5.5 lakh units that are stuck or delayed in top seven cities alone

Finance Minister Nirmala Sitharaman recently announced that the government will set up a special window to provide last-mile funding for housing projects which are non-NPAs and non-NCLT in the affordable and middle income category.

In the fund, Rs 10,000 crore will be contributed by the central government and roughly the same amount will come from outside investors. The government had said that this fund will help complete an estimated 3.5 lakh units across the country.

However, real estate data and analytics platform Prop Equity’s estimates that approximately Rs 90,000 crore will be needed to cure the housing sector of its ills.

Niranjan Hiranandani, president, NAREDCO, said that last mile funding is not for projects which are already under NCLT and/or are an NPA, as delayed projects in both these categories are already undergoing due process under the existing set-up.

“For delayed and stalled projects - for example in the NCR - this will be a major problem, given that most of such projects are under NCLT and NPA, and will not get the benefit of this stress fund. This announcement will not solve the problem of delayed/ stalled projects and affected home seekers in locations like the NCR,” he said.

Anuj Puri, chairman – ANAROCK Property Consultants, said that since the FM’s announcement doesn’t include projects that are NPAs and with NCLT, there is a possibility that not all homebuyers will get the said relief.

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 seven cities alone and this would be much higher if tier two and three cities are calculated.

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, he said.

"This is definitely a great move to support the sector given it has a substantial contribution to the country's overall GDP. It is definitely the need of the hour. It would be more beneficial if they additionally allow restructuring of debt to ease the liquidity crunch," said Ashok Mohanani, chairman, Ekta World and vice-president, NAREDCO Maharashtra.

"Relaxing the norms further for External Commercial Borrowing (ECB) reflects the government’s allegiance towards their stride of housing for all. It will invigorate the buying sentiments across the markets," said Rohit Poddar, managing director, Poddar Housing and Development Ltd.

"The special window announced by the Finance Minister to extend the funding for stalled projects is a big boon for the housing sector. This window will see allocation of the required funds to complete the projects which are non-NPA and non-NCLT affordable and middle-income housing projects. It will help the developers to overcome the stumbling block of funding issues," he elaborated.

"The government has just scratched the tip of the surface with the recent announcement. They are not realising the gravity of the situation. Real estate industry is the second largest contributor to our GDP and creates millions of employment opportunities. Hence, we expect much more support. We all are working towards realising prime minister Narendra Modi’s dream of Housing for All by 2022 but it is becoming challenging if the requisite policy reforms will not be announced," said Jaxay Shah, National Chairman, CREDAI.

“A special window is now to be bought into place to provide funds to non-NPA or non-NCLT stalled projects which are almost completed but are stuck due to lack of last mile funds. An indeed smart move on the governments part by allocating professionals from the housing and banking sector to run this window," said Manju Yagnik, vice chairperson Nahar Group.