India Real Estate Fund: Need To Redefine Affordable Housing, Says Anarock

The Rs 20,000-crore India real estate fund may help in completion of up to 2.5 lakh housing units across stalled residential projects in seven major cities, real estate consultant Anarock said Tuesday, while maintaining that the government needs to revisit the definition of affordable housing.

The seven cities include the four metro cities Delhi NCR, Mumbai, Chennai and Kolkata, as well as Bengaluru, Hyderabad and Pune.

On Sept. 14, Finance Minister Nirmala Sitharaman announced the government’s plan to create a special fund to provide financing to several stalled real estate projects across India. The government will contribute Rs 10,000 crore to the real estate fund, and expects a similar-sized contribution from external entities, like Life Insurance Corporation of India, banks and sovereign funds.

A developer, however, needs to satisfy certain conditions to be eligible for the India real estate fund:

• The real estate projects have to be at least 60 percent complete.
• Projects should have positive net worth, not classified as NPA and not under NCLT.
• Projects should be in the affordable and middle-income category.

"After considering these caveats, 2.5 lakh units can avail relief from the government's aid in the top seven cities alone. However, since data for projects under NPAs is not available, there could be a further dip in these numbers," Anarock Chairman Anuj Puri said in a statement.

Puri also said there was a need to change the government's definition of affordable housing. "As it stands today, the government labels a metro-based home as affordable if it measures 60 sq. mt. or less in carpet area and is priced within Rs 45 lakh. This price tag is far too low in cities such as Delhi-NCR and Mumbai. Moreover, the price definition of mid-segment homes is also not clear.”

According to Anarock, 4 lakh units in projects launched in 2013 or before are stuck or delayed across various segments, excluding NCLT projects. Of this, only those that fall under the mid-income or affordable housing categories, that is 2.5 lakh units, can legitimately avail of the government's new provisions.

"This can be further narrowed down when the nominated professionals from the real estate and banking fraternity select the projects to be given government aid. As of now, 2.5 lakh units can at least hope to be rescued under this provision. Only time will reveal the final numbers," said Puri.

A total of 5.76 lakh housing units are awaiting completion across stalled real estate projects in the top cities alone. These also include those facing insolvency proceedings at India’s bankruptcy courts.