Impact of Rs 10,000 crore fund for realty sector will be limited, say experts
The Credai, a group of private realtors, said the Rs 10,000 fund will not benefit homebuyers in the projects such as Jaypee Group, Amrapali, Unitech, Unnati Group, 3C Group and Shubhkamna among others, which are facing litigation and have been put into the category of non-performing assets.Updated: Sep 16, 2019 13:42 IST
The impact of the Rs 10,000 crore funds announced by the Centre for those realty projects which are not non-performing assets and not facing litigation in the National Company Law Tribunal (NCLT) may be limited and might not benefit all of the homebuyers whose investments are struck in delayed housing projects, according to the confederation of real estate developers’ association of India (Credai) and real estate experts.
On Saturday Union finance minister Nirmala Sitharaman had announced Rs 20,000 crore affordable housing package for the benefit of around 3.5 lakh home owners in the country. The government will contribute around Rs 10,000 crore to this fund, while investors like LIC, private capital, sovereign funds will contribute the remaining Rs 10,000 crore, the minister had said.
The Credai, a group of private realtors, said the Rs 10,000 fund will not benefit homebuyers in the projects such as Jaypee Group, Amrapali, Unitech, Unnati Group, 3C Group and Shubhkamna among others, which are facing litigation and have been put into the category of non-performing assets.
“The provisions of non-performing assets and the NCLT are very limiting and if not addressed, the deployment of this fund will become difficult,” said Getamber Anand, chairman & managing director, ATS Infrastructure Limited and former-president of Credai.
According to a report released in August this year by realty consultant Anarock, there were around 1.82 lakh unsold housing units across the national Capital region in the second quarter of this calendar year and Gurugram city accounted for 56,550 units (31%) of this, the highest in the region. Gurugram is followed closely by Greater Noida with 50,800 unsold units (28%), Ghaziabad (17%), Noida (11%), Delhi (7%) and remaining 6% in Bhiwadi and Faridabad.
“This is a major 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 possessions. However, since it does not include projects that are under non-performing assets 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 sectors only and to this effect, homebuyers within the luxury segment may have to wait even more. Also, there is no clarity of the price of mid-segment homes that will be included in this move,” said Anuj Puri, chairman, Anarock.
For mid-income groups, affordable house would mean a unit measuring between 600 and 1,200 square feet and priced between Rs 12 lakh and Rs 50 lakh, for which a buyer would have to shell out Rs 10,000-30,000 in instalments. Houses measuring more than 1,200 square feet come under the luxury category.
On the other hand, according to the Reserve Bank of India (RBI), the cost of affordable residential properties should be less than Rs 65 lakh in metropolitan cities and Rs 50 lakh in non-metro cities.
The stress fund, however, may not revive the delayed projects, where matters are on trial in NCLT, buyers said.
“I do not think that this stress fund of Rs10,000 crore will make much of a difference to the revival of the sentiment in the realty sector because the fund is meant only for clean projects, where there is no litigation. But the big question is that how will projects, where litigation in NCLT are underway, will be revived. Homebuyers, who are suffering in delayed projects which are under litigation, have nothing to cheer about with this fund. Also, the government has not given any funding relief to luxury projects,” said Kumar Mihir, who is fighting cases for Amrapali homebuyers in the Supreme Court.