Real estate developers welcome measures announced by Nirmala Sitharaman

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By Deepshikha Singh

NEW DELHI: The real estate sector has welcomed the new measures announced by Finance Minister Nirmala Sitharaman to revive the economy especially announcement of Rs 20,000-crore fund to complete stalled projects.

Interestingly, the government has not announced measures to create demand, which is necessary to rid the sector of unsold inventory and persistent cash crunch.

Of the 12.76 lakh units, the top eight cities, including Mumbai Metropolitan Region, National Capital Region, Bengaluru, Hyderabad, Chennai and Pune alone account for 9.66 lakh houses, according to a report.

The fund comes with many riders that most projects, especially in the National Capital Region (NCR), will not stand to gain anything. Of the Rs 20,000-crore funding, the government will provide Rs 10,000 crore, while the rest will come from other financial institutions. It will provide the last mile funding for projects that are not non-performing assets (NPAs) and have not been referred to the National Company Law Tribunal (NCLT).


Here are Views From Real Estate Developers and Industry Expert

Manoj Gaur, MD, Gaurs Group & Chairman, Affordable Housing Committee, CREDAI

Announcements by FM to boost housing sector is indeed welcome. Several mid-income and affordable housing projects which are witnessing slow progress due to lack of funds, will be expedited as the result of setting up of special window having a corpus of Rs 10,000 crore. It should help faster delivery of close to 3-3.5 dwelling units. The fact that the special window will be managed and monitored by professionals from housing and banking sector is another step in right direction. Also, govt decision to link housing building advance with yield on 10-year T-bill is likely to reduce effective interest rate for government employees, which should encourage them to buy new homes. Relaxation of ECB norms for affordable housing should also boost housing demand as the cost of funds will reduce for HFCs as a result of the move.

Mohit Goel, CEO, Omaxe Ltd.

Finance Minister’s announcement of setting up special window of Rs 10,000 crore for projects, which are 60% complete and are non-NPA and non-NCLT, is likely to ensure speedy delivery of projects. Needless to say, the measures will play a pivotal role in enhancing the confidence of home buyers in the real estate sector.

Moreover, the prevailing yield on 10 year T-bills is hovering around 6.6-6.7%. The Government decision to link House Building Advance to it effectively means reduction of interest rate for government employees, which constitute the biggest chunk of home buyers. This also augurs well for the sector ahead of festive season.

Pradeep Aggarwal, Co-Founder & Chairman, Signature Global and Chairman – ASSOCHAM National Council on Real Estate, Housing and Urban Development

The latest announcement by Hon’ble Finance Minister of establishing a special window will go a long way in helping affordable and mid-income housing. The move will ensure that mid-income and affordable income projects that are 60% complete and are non-NPA and non-NCLT, will witness faster completion thereby benefiting the buyers. It will also help the Government in achieving its objective of ‘Housing for All by 2022’.

Today’s announcements also indicate as Government’s effort of boosting the affordable housing as it had also announced in the budget an additional deduction of up to Rs 1.5 lakh for interest paid on home loans borrowed up to March 31, 2020 for purchase of house valued up to Rs 45 lakh. This s going to help increase the sale of affordable housing in tier II and tier III cities.

Dhiraj Jain, Director, Mahagun Group

The biggest relief came in the garb of last mile funding where projects that are 60% complete will get funding through special window. It is expected that around 3.5 lakh stuck units will benefit from the decision. With this support from the government the market will become more potent and many buyers will get the possession of their homes soon. Additionally, many unsold units of these stuck projects will come in the market opening an options galore for the property seekers. We welcome the FM for taking such a decision that is going affect so many lives and ease out the burden of real estate sector.

Parveen Aggarwal, Founder and Chairman, Signature Sattva

FM announced encouraging steps for the real estate sector especially the affordable segment, which has the maximum demand. Apart from contributing Rs 10,000 crore to complete construction of unfinished projects in affordable and middle income category housing, the FM announced relaxation of ECB guidelines for the affordable housing. By easing the financing for the home buyers, the government has paved the way for faster sale and possession of the projects. This will surely speed up the process of reaching the ‘Housing for All’ target.

Amit Modi, Director ABA Corp and President Elect CREDAI western UP

We really appreciate the recent steps anmounced by the Finance Minister to boost the Housing Sector and are happy that certain provisions demanded by the Real Estate Sector since long, have finally been brought on paper, especially the direct linking of Repo Rates to interest rates as this was a constant complaint from both the Homebuyers and Real Estate Industry that while the RBI was reducing the rates at regular intervals, the banks were using it to shore up there bottom lines rather than passing it to the end consumers, hence Homebuyers were always left in the same situation.

We also welcome the additional deduction of up to ₹1.5 lakhs interest paid on home loans for properties up to ₹45lakhs, and will request the Finance Minister to provide the same benifits for the bigger base, since most of the population living in Metro cities like Mumbai and Delhi will never be able to find accommodation upto ₹45 lakhs.

Overall we really appreciate these and other steps taken by the government to boost the Housing sector and realise Prime Ministers vision of Housing for All 2022.

Dhruv Agarwala, Group CEO,

The Finance Minister’s announcement of a Rs 10,000 crore fund for stuck projects could well be the lifeline the real estate sector, grappling with a slowdown, needs. While the Government will contribute Rs 10,000 crore, roughly the same amount will also come from outside investors. This fund is projected to benefit between 3-3.5 lakh projects in the country stuck at various stages of completion. The move to involve professionals and domain experts from fields such as banking and housing finance to identify projects and manage the fund is very astute and commendable. It is clear that the attempt is not just to help stalled projects but also home buyers whose life’s savings are stuck in such projects.

The FM also announced relaxation in ECB guidelines to facilitate the financing of homebuyers eligible under PMAY. These measures, along with the ones announced earlier will provide a real and tangible solution to the major problems being faced by the real estate sector, which are stalled projects, funding crunch faced by developers and home buyer stress. This in turn is likely to provide a major boost to the downbeat sentiment in the sector and will also encourage sales of new homes, which will further provide an impetus to the sector.

Satish Magar, President, CREDAI.

“Today’s announcement was a half-hearted attempt by the government to revive the real estate sector that is now showing long term recessionary trend. Even the governments fund of 10,000 crores for affordable middle income housing projects (non-NPA and NON-NCLT) will have a limited impact since majority of the stalled projects are due to lack of liquidity and thus will be NPAs.

The need of the hour, and expectation of the home buyers and the real estate developers across India was for the government to take bold decisions which will help revive the crumbling real estate sector. Today’s announcement was disappointing not just for the industry but also for the lakhs of people employed within the real estate sector, a lot is at stake for the developers, buyers and the country’s economic situation. It’s about time the government works towards resolving the root cause instead of just announcing piecemeal reforms that will not have a tangible impact in the long run.”