Gurugram: The recent announcement of the government has elated the real estate sector as it approved the creation of an Alternative Investment Fund (AIF). The fund aims to revive stalled housing projects through a corpus of ₹25000 Crores. It will kick start the completion process of the 1600 housing projects and 458000 housing units stalled due to the dearth of funds. Of the total stalled projects about two lakhs are in NCR and one lakh in Mumbai. Such a measure is expected to bring fervor in the industry.
Government will infuse ₹10000 crore in the fund while the remaining ₹15000 crore will be contributed by State Bank of India, LIC and other financial institutions. The fund will help incomplete housing projects of less than ₹Two crores per unit in Mumbai, ₹One and half crores per unit in other metros including national capital region (NCR) and ₹One crore per unit in other parts of the country get ready for move-in.
“We welcome the announcement by the Finance Minister to set up a `Special Window` in the form of AIF and dedicate a fund of 25,000 crore for the completion of stalled housing projects. The move is expected to create an avenue of relief to homebuyers and the developers in the sector. The specific fund is expected to revive 80% of the real estate projects. This action by the government will induce cash flow in the system and kick start the revival process. This decision will not only help in completing the stuck projects in this sector, but will also regain the confidence of buyers to invest in real estate. The benefit will surely be felt in NCR and Mumbai region.” – Ashish Sarin, CEO, AlphaCorp
Falling prices, shrinking sales and piling inventory have collectively created hurdles before the developers. Situation was worsening as the fear of default made financial bodies reluctant to lend for these projects. The consequent slump in the construction affected current jobs and future job prospects. The move would help generate considerable employment opportunities.
In an another relief, the industry players facing insolvency proceedings are allowed to avail funds, who were earlier debarred from the September package. The fund will also be available for projects declared defaulters. All these inclusion will collectively improve market sentiments for the real estate sector.
But, to avail the benefits of the fund the projects need to be registered in RERA (Real Estate Regulation and Development Act). Besides, they should have a positive net worth. Projects declared an NPA or are before the NCLT but not asked for liquidation will also get benefits. Financially viable projects lacking funds will be at the core and will get benefits from the allocation.