Gurugram developers upbeat about Rs 25,000 cr stress fund announced by govt
Builders, who have realty projects in Gurugram, said fund will help bridge trust deficit among buyers, but some experts advise caution.Updated: Nov 08, 2019 13:27 IST
The Union government’s announcement that it will set up a Rs 25,000 crore alternative investment fund (AIF) for the real estate sector, to help in the completion of projects, including those that are stalled, has enthused developers in Gurugram, who have been complaining about a lack of funds and tightening of loan disbursal by banks and non-banking finance companies (NBFCs).
Realty experts also said bringing projects that have been designated as non-performing assets (NPA) by banks, or where the buyers have approached the National Companies Law Tribunal (NCLT) under the ambit of AIF could help greatly, as it was a major pain point for the industry.
The Union finance minister on Wednesday evening announced the setting up of the AIF to aid the realty sector.
As per data collated by real estate consultancy Anarock, there are around 19 lakh units that are in various stages of construction in India’s top seven real estate markets. Nearly 5.76 lakh units were launched in 2013 or before, which can be described as delayed or stuck inventory, while the rest are under construction. As per the data, the number of stuck or stalled projects are the lowest in Delhi-NCR.
Gaurav Mittal, chief managing director, CHD Developers, which has two stuck projects in Gurugram, said the setting up of AIF would help buyers and developers who have projects on the verge of completion. “I have two projects — Golf Avenue 106 and CHD Vann, and need Rs 83 crore in total to complete them. Around 700 buyers will be benefitted and I will also be able to complete the under-construction inventory and sell it,” said Mittal. Most of the developers said that with buyers only going for ready-to-move in projects, it had become difficult for them to generate funds.
Amir Husain, president, sales and marketing, Orris Infrastructure, whose ‘Greenopolis’ project has been stuck due to funding and legal issues, welcomed the development and said it will help the developers. “This will certainly help, but we will wait for the fine print to say anything on its impact on the market or our project,” he added.
The Greenopolis project was launched in collaboration with Three C Shelters Pvt Ltd in 2012, and the licence for the project was issued to Orris. The project, scheduled to be completed by 2015-end, is still pending despite a number of hearings in Haryana Real Estate Regulatory Authority (HRERA).
Pradeep Aggarwal, founder and chairman, Signature group, which has projects in Gurugram said stuck projects were affecting the sale of projects even by those developers who had delivered their projects, leading to “an unsettling situation”. He said, “There was a trust deficit in the market but this fund will help in completing the stalled projects and can prove to be a game changer.”
Real estate consultants meanwhile said stringent criteria with respect to projects being net worth positive, registration with RERA, appraisal by investment committees, will ensure the protection of commercial returns for investors. “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,” said Ramesh Nair, CEO and country head, JLL India.
The consultants also called for immediate measures to re-infuse confidence and further revive the housing sector. “The government should clarify and expedite the timelines for releasing the funds and actual implementation. Announce operational guidelines in terms of geography, the scale of development, progress of construction, asset classification, developer eligibility among other things,” said Anuj Puri, chairman, Anarock property consultants.
Ramesh Menon, CEO, Certes Realty, a city-based consultancy, however, said this fund would help real estate projects that are already in completion phase, but would not add any new sparks in the realty space. “This move will also help homebuyers whose projects are stuck and they may finally get their dream houses,” he said.
Sanjay Sharma, another consultant, said the fund would help legitimate projects and buyers, but will not be helpful in cases where builders have wilfully defaulted or vanished.