In 2021, the challenges begin with funding issues: Dr Niranjan Hiranandani

      Comments Off on In 2021, the challenges begin with funding issues: Dr Niranjan Hiranandani

Dr Niranjan Hiranandani is also the president of National Real Estate Development Council (NREDC) and the apex industry body — ASSOCHAM (The Associated Chambers of Commerce and Industry of India).  Under his remarkable leadership, the Hiranandani Group has diversified into education, healthcare, hospitality, infrastructure, entertainment and organized retail. The group has set the benchmark in terms of quality construction, precision engineering, technology & innovation, timely delivery and holistic development. Displaying extraordinary qualities as developer, the Group has spread its footprints in the newer markets like Thane, Panvel, Alibaug, Khandala, Chennai, Ahmedabad and Pune.

With his profound knowledge, sharp business acumen and an ambitious attitude, he has been conferred with the leadership role across various prominent business organizations and industry chambers. He is also Member – RERA Conciliation Cell formed by Maharashtra Real Estate Regulatory Authority (Maha RERA); Member of Central Governing Council of Export Promotion Council for EOUs & SEZs

Some of his achievements include – drafting the State Policy for Slum Rehabilitation in Mumbai designed to improve the well-being of over 6 million slum inhabitants; trustee for creation of Nathdwara Township as a heritage destination; serving on the Board of the Housing and Urban Development Corporation (HUDCO), an organization which distributes $3 billion per annum to help fund the building of housing for low income families; acting as an adviser to the Government of India on housing and habitat policy for over a decade.

Recently, Dr Hiranandani spoke about the Union Budget 2021, current challenges in residential real estate and a data centre in Noida in Delhi-NCR, and industrial logistics and data Center Park in West Bengal.

In an interview with The Global Realty, Dr Hiranandani also talks about the setting up of a Film City in Noida along the Yamuna Expressway in western Uttar Pradesh along with the proposed airport in Jewar.


Kindly explain what real estate gained in Union Budget 2021?

The aftermath of Covid-19 pandemic and the impact of lockdowns on the economy mean that all sectors suffered during 2020, so any positive for any sector in Union Budget 2021 translates into a home buyer from that industry getting the confidence to go ahead and buy a home. Overall, the Budget is structured to give a boost to GDP growth, which, in turn, will positively impact real estate. Moving to measures specific to real estate in the Budget 2021, the Government has continued its emphasis by supporting Affordable Housing and the initiative, Housing for All. In sync with this, an additional deduction of interest, amounting to Rs 1.5 lakh, for loan taken to purchase an affordable house which was announced in July 2019 is proposed to be extended by one more year. In a move that will keep up the supply of affordable houses, it is proposed that affordable housing projects can avail a tax holiday for one more year. Aimed at creating supply of Affordable Rental Housing for migrant workers, it proposed allowing tax exemption for notified Affordable Rental Housing Projects. Going beyond the affordable segment, a move to incentivize home buyers and real estate developers is a proposal to increase safe harbour limit from 10 per cent to 20 per cent for specified primary sale of residential units.

From an industry perspective, an Asset Reconstruction Company and Asset Management Company is proposed to be set up, to consolidate and take over existing stressed debt and then manage and dispose of the assets to Alternate Investment Funds and other potential investors for eventual value realization. For faster resolution of cases, NCLT framework will be strengthened, e-Courts system will be implemented as will introduction of alternate methods of debt resolution and special framework for MSMEs (some real estate companies come under this segment).

For construction workers, it is proposed to launch a portal that will collect relevant information on gig, building, and construction-workers among others. This will help formulate Health, Housing, Skill, Insurance, Credit, and food schemes for migrant workers, which will work out positively for the industry.

From an investment perspective, debt financing of InVITs and REITs by Foreign Portfolio Investors will be enabled by making suitable amendments in the relevant legislations. This will further ease access of finance to InVITS and REITs, thus augmenting funds for infrastructure and real estate. To sum up, direct measures related to the affordable housing segment, but overall a budget which is positive for the economy will bring in positives for real estate as well.

As Covid-19 cases are going down in India, do you foresee the growth of real estate?

The answer is yes, but there’s a rider – it requires support in the form of measures by authorities. So, reduction in Circle Rates by the Delhi Government; reduction in stamp duty by Maharashtra and measures that ensure a low interest rate for home loans are among ‘support measures’ which are needed to fast-track growth in real estate post the Covid-19 pandemic.

What are the current challenges in residential real estate?

It needs to be understood first that real estate was undergoing a slowdown as a result of reforms, economic, industry and taxation. Corona was just one more challenge. In 2021, the challenges begin with funding issues. So, last mile funding, stressed asset resolution and restructuring of debt top the list. Widening the scope of ‘ease of doing business’ to cover single window time bound clearances and permissions, as also ensuring extension of regulatory norms by another six months are among the major challenges in residential real estate.

Recently, Hiranandani Group announced a data centre in Noida in Delhi-NCR, and industrial logistics and data Center Park in West Bengal, will the company expand its footprint in other states too?

The Indian economy has the potential to bounce back quickly post the Covi-19 pandemic, and the positive measures undertaken by the Indian Government provide a positive platform to grow and expand – different sectors and different geographies. Industrial and Logistics Parks and Data Centres are two segments which show great potential; and as a company, we have expertise in developing both. As new options are evaluated, and viability in new geographies becomes apparent, we are making moves into those locations, in the segments where we see good growth potential. Obviously, as we consolidate activities in any location, other segments will also get evaluated; and we in all probability, expand our repertoire of offerings in these locations. But, this will happen at the right time, as viewed from a Group Company perspective.

Share with us Hiranandani Group’s upcoming residential project.

At this point of time, we are looking at new locations and are evaluating options; post the Covid-19 pandemic, the focus is on completing existing projects. In the ‘new normal’, post the pandemic, we have come up with homes that reflect the customer demand in terms of features and amenities which are seen as ‘must have’ by the new age home seeker. We are working on coming up with offerings that include these required features, and new towers/ phases have been launched in existing projects. It is still a phase where we are working on being ‘ahead of the curve’ and being the market leader, offering something in present day offerings which will become the norm in the near future – but our offerings will include these ‘future norms’  in present day. We are working on such options at our projects in Hiranandani Gardens, Powai, Mumbai; at Hiranandani Estate, Thane; at Hiranandani Fortune City, Panvel and Hiranandani Parks, Oragadam, Chennai.

What suggestions would you like to place before the Narendra Modi government to bolster up India’s economy that was battered by Covid-19?

There is an urgent need to ramp up measures that result in ‘ease of doing business’, as also measures to enhance funding options as also support for stalled and delayed projects, including resolution of stressed assets and last mile funding. Having said this, let me add that the Hon’ble Prime Minister and the Government of India are already doing a lot to bolster India’s economy in the aftermath of the Covid-19 pandemic. Every industry has its own unique perspective; but for real estate, growth in other industries translates into more sales – buyer segments who earn from those industries which post growth will fuel sales in real estate. Industries which gain earlier from the Government’s measures will power off-take in commercial real estate.

Do you think that reducing circle rates and stamp duty will boost real estate demand?

These measures work at two levels. First, they encourage ‘fence sitters’ to go ahead and make the ‘buy’ decision; so sales increase. Secondly, these positively impact overall buyer sentiment; which results in additional demand. Given that real estate and construction support 250-plus ancillary industries, such measures will have a positive impact on all ancillary industries too; will result in enhanced jobs across these 250-plus industries as also revenue for the concerned state government. So, there is a positive impact from the economic perspective too, the overall impact is positive.

Do you think that the setting up of a Film City along the Yamuna Expressway in western Uttar Pradesh along with the proposed airport in Jewar will give a fillip to the real estate sector in Delhi-NCR?

Any new infrastructure project has a positive impact on not just the real estate micro-market, but also on the region’s economy. So, the positives of these projects will also be felt in the NCR, and not just in western Uttar Pradesh. My perspective is to see the two examples you have mentioned as enlarging the quantum of business in the respective sectors from a pan-India basis. So, the international airport at Jewar will not compete with and negatively impact volumes at existing airports in Delhi; rather it will offer a bouquet of services targeting segments in civil aviation like air cargo or aircraft maintenance for which sufficient space is not available at existing airports in the regions adjacent to the NCR. Passenger growth will definitely happen, and existing airports as also the new one at Jewar will see growth in the number of passengers who fly from these. Obviously, this will give a fillip to the real estate sector across the region; Delhi-NCR is very much a part of this geography and will benefit from the same.