Though a government-backed alternate investment fund (AIF) has sanctioned as much as Rs 10,284 crore to help complete 101 stuck housing projects, only a fraction of the approved fund has been released.
Though a government-backed alternate investment fund (AIF) has sanctioned as much as Rs 10,284 crore to help complete 101 stuck housing projects, only a fraction of the approved fund has been released. Industry sources told FE disbursement has been to the tune of only Rs 1,000-1,500 crore, as a Covid-induced slowdown in construction has kept a lid on offtake.
Some of the projects that have received final approval for the funds are Highland Park (Ansal Housing) in Gurgaon; Naman Premier (Naman Group) in Mumbai’s Andheri East; Upper Thane project (Lodha Developers); Primera (Ramprastha Group) in Gurgaon; Asha Bahadurgarh (Essel) in the national capital region; Mantri Serenity (Mantri Developers) in Bengaluru; Lake Grove (TDI) in Sonepat and Vedantam Minaret (Magnus) in Delhi’s Indirapuram.
According to an official estimate, the sanctioned funds, once disbursed, will enable the completion of 71,559 houses across the country. SBICAP Ventures, an arm of SBI Capital Markets, is entrusted by the government to manage this AIF.
A spokesperson for the fund, set up under the Special Window for Affordable and Mid-Income Housing (SWAMIH), declined to share disbursement details but said: “It is worth noting that disbursements will always be gradual because they will be calibrated to the progress of construction.” Therefore, disbursements will take place in several tranches over a construction period of 1-3 years. “Also, remember that Covid-related lockdowns have impacted worker mobilisation since March,” he said in an email reply.
The 101 projects are spread across a broad mix of markets, including metros and also Tier- 2 locations like Karnal, Panipat, Lucknow, Surat, Dehradun, Kota, Nagpur, Jaipur, Nashik, Vizag and Chandigarh.
Finance minister Nirmala Sitharaman has reviewed the performance of the SWAMIH fund at least twice since July and asked officials concerned to further speed up the process. As of August 20, the fund gave final approval to investments of Rs 3,472 crore in 22 projects, while preliminary nod was granted to 79 projects involving investments of Rs 6,812 crore, the finance ministry recently said.
After a meeting in July, the finance ministry had said the SWAMIH Fund was also actively evaluating options to provide relief to more than 15,000 homebuyers in certain long-stalled projects which were pending before the Supreme Court for resolution.
The fund was announced on November 6, 2019 and raised Rs 10,530 crore from 14 investors, including LIC, HDFC and SBI, when it declared its first close in December. The plan was to have a Rs 25,000-crore fund, with contribution of both the government and other investors.
The government had pledged a total of Rs 10,000 crore for this purpose, as it wanted to kick-start the investment cycle in residential projects and deliver houses to people who have been humbled by the double whammy of undelivered homes and regular repayment of home loans. It was also supposed to boost private consumption once houses are delivered.
Analysts believe that offtake will improve once construction activity picks up pace once the impact of the pandemic wanes. Adishesh Mitra, senior director (Capital Markets) at JLL India, said the fund’s reduction in the cost of capital to 12% has drawn a lot of players. “For the sake of comparison, if the same deal was done with a non-SWAMIH fund, then the interest rate could be in the range of 18-20% (given the risk aversion among lenders towards realty).”
According to an industry estimate late last year, as many as 4.58 lakh housing units were facing delayed delivery across 1,509 stalled projects.