Housing sector says thumbs up to stimulus package

[vc_row][vc_column][vc_column_text]The stimulus package or the supportive measure announced by the government for the housing sector would definitely help the beleaguered housing sector.

September saw a slew of measures from the government side. One of them is the booster package announced for the housing sector the stakeholders expects will bring back the momentum.  As part of the measures rolled out by the government to boost the housing sector, the Finance Minister Nirmala Sitharaman announced that a Rs 20,000 crore fund would be set up to provide last mile funding for affordable and middle-income housing. Of which Rs 10,000 crore would be from the Government and roughly the same amount from outside investors. This fund will be used to support projects that are not non-performing assets (NPA) or have not gone into the insolvency process (NCLT). The objective is to focus on the construction of unfinished units.     

Nearly 3.5 lakh dwelling units (non NPA and non NCLT) in the country are plagued with last-mile funding problem, according to Sitharaman, who also announced that the fund would be set up as a Category-II AIF trust and would be professionally run with experts from housing and banking sector. According to an official the number of housing units classified as NPAs and under bankruptcy proceedings, combined, was around 180,000 units.           

Economic Affairs Secretary Atanu
Chakraborty later made it clear that the Government was “open” to bring in sovereign wealth funds as investors. Besides the Government, the other investors who are likely to contribute to the fund include LIC and other institutions and private capital from banks and DFIs. For the housing sector, Sitharaman had also announced that external commercial borrowing (ECB) guidelines would be relaxed to facilitate financing of home buyers who are eligible under the PMAY, in consultation with RBI. This will be in addition to the existing norms for ECB for affordable housing, she said.  

Also, the Finance Minister came up
with some good news for government servants, stating that interest rates on house building advance will be lowered and linked with the 10-year G-sec yields. Government servants contribute to a significant component of demand for houses, she added.[/vc_column_text][vc_column_text]Voices of India Inc

Anuj Puri, Chairman - ANAROCK Property Consultants 

With India continuing its face-off with an economic slowdown across sectors, the government is on top of its game and taking a head-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. Rs10,000 crore will be contributed towards this by the government of India.   

This is a significant 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 particular window of funds will allow many developers 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.[/vc_column_text][vc_column_text]Rajesh Sharma, Managing Director, Capri Global Capital Limited

“Last-mile finance has been a major hurdle for several mid-income and affordable housing projects which are witnessing slow progress. The recent announcement will expedite the completion of these projects, thereby benefiting the buyers. The government is taking possible steps to stimulate the real estate sector and sending a clear message of the government's priority to revive the sector and meet the goal of 'Housing for All by 2022'. We have always supported the PMAY campaign throughout, and such steps are very beneficial for our customers, who can fulfill their dream of buying a home more easily, especially in Tier II and Tier III regions.”          [/vc_column_text][vc_column_text]Rohit Kharche, Director, The Baya Company       

"The Government's announcement on the stressed fund is a reassuring move for the real estate industry, which is currently going through a critical time. Today's steps reaffirm the governments interest in providing a necessary boost to the housing industry.    

However, there is much-needed clarity required on GST, further streamlining and reduction in GST impacting buyers, the reintroduction of subvention schemes which is currently not available to buyers.             

The stress fund of Rs 20,000 crore will not only help in reviving stalled projects and relieving distressed developers but also uplift the realty sector on the whole. This is an imperative start,  and we hope that similar positive actions will follow.”[/vc_column_text][/vc_column][/vc_row]

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