New Delhi, November 7: A day after the Union Cabinet cleared the ‘special window’ for financing stalled housing projects, industry experts welcomed the move saying that it couldn’t have come at a better time and would benefit a majority of homebuyers while also spurring demand. However, they added that it will take time to set up and implement the Alternate Investment Fund (AIF) for which the government would commit Rs 10,000 crore as the sponsor of the fund.
AIFs are funds established or incorporated in India for the purpose of pooling in capital from Indian and foreign investors for investing as per a pre-decided policy.
Anuj Puri, chairman, Anarock Property Consultants, said the move was in line with Finance Minister Nirmala Sitharaman’s promise to bring relief to the realty sector.
“To be used for last-mile funding of stuck affordable and mid segment projects, this is a critically important move which eliminates the ambiguity which surrounded the timelines for setting up the fund, and its actual implementation. Finally, countless aggrieved homebuyers will see the light at the end of the tunnel,” Puri said.
He added that the move couldn’t have come at a better time because the delay in the on-ground deployment of the stress fund was causing serious apprehensions.
The total size of the fund is expected to be Rs 25,000 Crore with SBI, LIC and some other agencies pumping the rest of the amount in due time. The fund will also be open to other sovereign funds to add to the corpus. More importantly, several NPA projects and those facing bankruptcy proceedings under NCLT shall also be included provided they are not referred for liquidation. This is in contrast to the Finance Minister’s earlier announcement in September when she had said that NPA and NCLT projects would be outside the ambit of the special window.
“This will bring in even more stalled projects into the eligibility criteria and give relief to more aggrieved homebuyers,” Puri said.
Avneesh Sood, director, Eros Group, added that the government initiative to provide a structured method of infusing liquidity into stuck projects, and thereby addressing the key issues of project funding, completion and delivery, was expected not only to support the real estate sector but also generate commercial returns for its investors.
“We are very much positive that a majority of stuck homebuyers will benefit from the declaration but at the same it will take time to set up and implement the Alternate Investment Fund (AIF),” he said.
The government had on Wednesday said that the fund that would be set up as category-II AIF Fund registered with SEBI. The funds would be entrusted to professional investment managers with the first AIF to be managed by SBICAP Ventures Limited.
Mustafa Nadeem, CEO, Epic Research, said the announcement was good news for realty space and that the "debt financing" under a special window was going to help companies complete their stalled projects.
“We may see a revival in demand from specifically home buyers that are from middle income group. These houses would rather have a very high impact in projects that are in tier II and tier III cities. It has seen very fast growth in the last few years while urban development. So it's a win-win situation for realty space companies and the economy,” he said.
Amit Gupta, co-founder and CEO, TradingBells, said while the cabinet approval for the already-announced scheme is positive for overall real estate sector and housing finance companies, but investors should remain cautious while selecting the stocks because only quality stocks would perform from here.
“In the realty sector, our top picks are Oberoi Realty, Godrej Properties whereas Suntek realty and Sobha could also do well. In housing finance, HDFC will continue to dominate whereas Canfin home finance could also do well from here,” he said.
Investors and traders should also focus on other housing-related stocks like Asian paint, Kajaria Ceramics, Pidilite, Ramco Cement, Shree cement, he added.
The finance minister had on September 14 announced that a special window for affordable and middle-income housing will be created to provide last mile funding for stressed housing projects.