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Need a stressed asset fund to bail out almost complete realty projects: Deepak Parekh

According to Parekh, there are buyers like sovereign wealth funds and private equity funds who are tempted to invest in office realty.

September 09, 2019 / 04:49 PM IST

At a time when thousands of residential homes find no takers, the future of commercial real estate seems bright, according to Deepak Parekh, the chairman of Housing Development Finance Corp (HDFC).

"Commercial real estate is booming ... particularly for the IT back-office sector and one never sees a slowdown in this," told Parekh in an exclusive interview with CNBC-TV18.

The increase in urbanisation, rapid migration and the rise in population of the youth in metros have lifted the demand for the commercial realty.

According to Parekh, there are buyers like sovereign wealth funds and private equity funds who are tempted to invest in office realty.

"There are buyers like private equity funds, there are buyers like the Blackstone, the Brookfield of the world who are buying and there are many more buyers who are coming in. They are buying it for yield," he said.


On the affordable housing front, the industry veteran said, "In our core business of housing, affordable housing is the name of the game. We see massive growth in affordable housing."

To meet the affordable housing demand, HDFC has set up a fund named HDFC Capital Affordable Real Estate – 2 (H-CARE 2).  State-owned National Investment and Infrastructure Fund (NIIF) of India has invested Rs 660 crore in H-CARE 2.

H-CARE 2 is structured as a Category II Alternative Investment Fund with a corpus of Rs 4,290 crore. The fund provides mezzanine finance to developers of mid-income and affordable urban housing projects.

The fund has launched half a dozen projects in the last three months across India - Noida, Gurgaon, Pune, Mumbai, Bangalore.

"Reliable developers, right-sized apartments, right-priced apartments and fits in with the Prime Minister’s Awas Yojana (PMAY) scheme and they are selling like hotcakes," said Parekh.

PMAY is a central scheme aimed at ensuring housing for all. To apply for a loan under PMAY, the annual income for medium income group (MIG) I should be below Rs 12 lakh and for MIG II it should be between Rs 12 lakh and Rs 18 lakh.

According to a recent CREDAI-CBRE report, affordable housing will remain the dominant segment in the coming years with a total of 10 million PMAY (U) units to be delivered by 2020 itself.

On the Pradhan Mantri Awas Yojana, he said, "Recently they (PMAY) have also increased the eligibility of a developer which is tax-free income - for four metros it has been increased to 60 square metres and other than four metros it is 90 square meters, this is carpet area. So developers on the outskirts of the four metros are building 400-500 sq ft homes, their total income is tax-free and that is the incentive they get and there is demand."


Source: CNBC-TV18
first published: Sep 3, 2019 04:28 pm
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