Steps taken by Finance Minister to help real estate sector should show results in upcoming months. Indian economy is facing a period of slow growth and Indian government has taken some steps for different sectors to improve growth. Analysis for Indian real estate market by Anuj Puri, Chairman - ANAROCK Property Consultants follows....

Taking the first step in addressing the key issue of delayed housing projects across the country, the FM recently announced the setting-up of a special window of INR 10,000 crore for last-mile funding of distressed affordable and mid-segment homes. Approximately the same amount of funds will be added by outside investors such as LIC, etc. However, this comes with a caveat - the projects should not be non-performing assets or pending under NCLT, and must be at least 60% complete.

According to the latest research by ANAROCK, after considering these caveats, nearly 2.5 lakh units across top 7 cities can avail relief from the government’s aid in the top 7 cities alone. However, since data for projects under NPAs is not available, there could be a further dip in these numbers. That said, as of now, nearly 63% of the total stuck/delayed units (4 lakh units approx.) may see a flicker of hope.

While this move is commendable, the government need to change its definition of ‘affordable’ housing. As it stands today, the government labels a metro-based home as affordable in metros if it admeasures 60 sq. mt. or less in carpet area and is priced within INR 45 lakhs. 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.”

How the numbers stack up

There is no simple yardstick to calculate the exact number of units and the actual funds that are needed to complete them. Each delayed project is different in size, stage of completion, city and micro-location, etc. Also, various methodologies are used to reach an approximate number. After considering the government’s caveats – non-inclusion of projects under NCLT, and inclusion of mid and affordable units only, ANAROCK has shortlisted units launched in 2013 or before.

Using this formula, it emerges that a total of 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 affordable or mid categories - 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.