Those waiting for new homes in the beleaguered real estate sector can look forward to some good tidings, thanks to government intervention.
Within about a year and a few months since it was tasked with funding stuck projects across the country, SBICAP Ventures, the manager for the government's Rs 25,000-crore stressed-asset fund, will be delivering about 17 housing projects consisting of more than 6,000 homes by the end of the financial year 2022, Irfan A. Kazi, Chief Investment Officer at SBICAP Ventures Ltd, told Moneycontrol.
Two projects, 710 units in Mumbai and 600 units in Rewadi, will be delivered by April 2021 itself, he said.
The fund, set up under the Special Window for Affordable and Mid Income Housing (SWAMIH) by the government, is looking to complete 17 projects by March 2022.
“We are looking at getting 17 projects completed in the next one year. Projects are completed in phases and in this case, we are talking about only the first phase of any project getting delivered. About 6,000 plus homes will be handed over by the end of March 2022,” Kazi said.
He did not share details of how much funding has gone into the completion of the projects. “We provide enough funding for completions,” he merely added.
The fund has so far given approvals to around 164 projects involving an investment of more than Rs 15,000 crore, which will help complete around 1,00,000 homes. Of this, 55 housing projects have received final approvals and about 109 have got preliminary sanctions.
“A total of 164 projects have received some approvals,” he said.
As for the challenges, Kazi said that the first charge issue remains a roadblock. Lenders are not willing to give up the first charge.
“We are fine with taking charge, subject to a sovereign authority imposition, but the first charge issue still remains a challenge and yet we have achieved significant progress on that front. But we are also doing many deals where some lenders have agreed to cease charge or where there are no lenders. In a few deals, the lender is an Alternative Investment Fund, where there is no issue of a first and second charge,” he said.
The Fund sees the COVID-19 pandemic as another reason why developers will approach them. “Once the moratorium ends there will be more housing projects getting classified, according to their health status. More lenders and developers are likely to come forward to seek last-mile funding. We are a distress fund and if there is distress in the environment, there will be a greater number of deals,” the Fund’s Chief Investment Officer reasoned.
SWAMIH has received many applications from real estate developers during the COVID-19 crisis after it decided to cut the internal rate of return (IRR) to 12 percent from 15 percent last year.
In November 2019, the central government announced a Rs 25,000-crore SWAMIH Investment Fund to help complete over 1,500 stalled housing projects, including those that have been declared non-performing assets (NPAs) or had been admitted for insolvency proceedings. The move is likely to help 4.58 lakh housing units across the country. Only RERA-registered projects with a positive net worth will be provided funds.
There are a total of 5.02 lakh units that are presently stuck or delayed, as of the end of 2020, across the top seven cities. Their total value is estimated at over Rs 4.07 lakh crore, an analysis by Anarock has said, adding that National Capital Region (NCR) and the Mumbai Metropolitan Region (MMR) together account for a 74 percent 'majority share' of currently stuck/delayed units, while the southern metros of Bengaluru, Chennai and Hyderabad add up to a small 8 percent.