In a significant move aimed at bringing relief to homebuyers and realty players, the Modi government has announced constitution of a Rs 25,000 crore Alternative Investment Fund (AIF) for reviving 1,600 stalled projects, mainly in the affordable and middle-income categories. These monies will be pumped in jointly by the government, Life Insurance Corporation of India (LIC), and State Bank of India (SBI). Here is how some key real estate developers and observers have responded:
By Mrinmoy Bhattacharjee
“CREDAI fraternity and the housing industry welcome the government’s decision to set up an AIF to rescue the stalled housing projects. By providing last-mile funding to net worth positive projects, up to five lakh homebuyers will now be able to get the delivery of their dream home. As NPAs and NCLT listed projects would be eligible for funding from AIF, all developers have been enabled to rise above challenges and complete their projects without further delay,” Satish Magar, president CREDAI National said.
“I also believe that these measures would have a wider impact by accelerating the much-sought investments, growth and above all employment,” he added.
“Game Changer” Move
The Cabinet’s approval of a special window for funding of stalled affordable and middle-income housing projects to enable homebuyers to get delivery of homes locked in stalled housing projects is an extremely “positive” move. This move by the Finance Minister is likely to become a game-changer, as it now includes projects which are NPA or are under NCLT, a major pain point that was left unaddressed in the last announcement,” Ramesh Nair, CEO & country head, JLL India says.
“This will be a respite to homebuyers whose dream of owning their own house has been long shattered owing to uncertainties in project deliveries. At the same time, it protects the interests of the private investors who are expected to contribute nearly 60% to this proposed fund,” he added.
According to Nair, stringent criteria with respect to projects being net worth positive, registration with RERA, an appraisal by investment committee will ensure safety and protection of commercial returns for the investors. The registration of projects with RERA being one of the necessary conditions will have a far-reaching impact on states which are lagging in the implementation of the reform.
At the same time Nair observed, “States which have not implemented RERA may not benefit from this liquidity shot. JLL’s recent study showed that 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 has come at an opportune moment when the residential market is tackling the headwinds from the trickle-down impact of the series of reforms and economic slowdown. While it will boost consumer sentiment and enhance confidence, it will act as a strong catalyst in pushing the sales velocity.”
RoI in Sight
Avneesh Sood, Director Eros Group, said, “We welcome the government’s initiative to provide a structured method of infusing liquidity into stuck projects and thereby seek to address the key issues of project funding, completion and delivery. The fund is expected not only to support the real estate sector but also generate financial returns for its investors. We are very much positive that a majority of stuck homebuyers will benefit from the declaration, but it will take time to set up and implement the Alternative Investment Fund (AIF).