Real Estate sector to be soon classified as a different asset class: Shri Hardeep Singh Puri, Minister of Housing & Urban Affairs

by Suman Gupta

NAREDCO– APREA’s biggest three–day ‘Real Estate and Infrastructure Investors’ Summit (REIIS) – 2020’ concluded with the hope of fast-track real estate sector growth with demand revival,  more liquidity with foreign funding acceleration, emergence of new assets classes

Mumbai, November, 2020: The Government would ask other financial institutes to open up the financing avenues on the lines of SWAMIH Fund to provide priority debt financing for the completion of stalled housing projects, revealed Shri Hardeep Shri Hardeep Singh Puri Minister of State (Independent Charge) of the Ministry of Housing and Urban Affairs; Minister of State (Independent Charge) of the Ministry of Civil Aviation; and Minister of State in the Ministry of Commerce and Industry, in his valedictory address at the third day of the virtual NAREDCO– APREA’s biggest three–day ‘Real Estate and Infrastructure Investors’ Summit (REIIS) – 2020’, which was jointly organised by NAREDCO and APREA NAREDCO and Asia Pacific Real Estate Association (APREA), along with knowledge partner Anarock with the theme of ‘India – Opportunities in the Coming Year’.

He further asserted that the Ministry will soon consider classifying the real estate sector as a different asset class to give it a further boost. “There was a proposal that the real estate needed a different asset class, please send a note and we will push this forward,” he said.

The Minister also promised the apex developers’ body, NAREDCO, that the Ministry would interact with the Finance Ministry to further rationalise the Circle rates and explore the possibility of enhancing the FSI limits to pump in more housing inventory in the market. “

Addressing the concern of the developers in Mumbai that the pending environment clearances in the capital city of Mumbai are delaying completion of the projects, the Minister urged the Maharashtra State Government to set up a Committee in this regard to resolve the issue. The Minister also hinted that the Government would encourage other states to reduce stamp duty for boosting the housing sales. He also suggested the developers to offload inventory in real time for a fast-track growth.

Shri Puri informed that the projects under the PMAY scheme would be completed in time and the Prime Minister was revivewing the progress on this front. Mentioning that the scheme of affordable rental housing complexes is on a fast track mode, he said, “We have signed MOUs with 27 State Governments for this programme and have received over 28 lakhs registrations on the portal that speaks about its volume and need.”

Ms. Renu Sud Karnard, Managing Director, HDFC Limited pressed for the need to classify the real estate sector as a different asset class and pointed, “The Central and State Government’s reforms like liquidity infusion and stamp duty reduction have revived the demand. We need more reforms such as increasing the FSI, review of ECLGS – 2 schemes for housing finance companies to keep up the momentum.”

Meanwhile, Mr. Rajeev Talwar, National Chairman NAREDCO urged the Minister to consider FDI flows into the affordable housing segment and expected further tax reliefs on home loans to give a boost to housing construction.

Mr. Niranjan Hiranandani, National President NAREDCO, said, “We need a housing revolution to bring the real estate sector on a growth mode. The reforms the Government has started to support the real estate sector shall continue to make urban living sustainable.”

Mr Ashok Mohanani, President, NAREDCO West said, “The real estate sector is thriving back and set to garner about USD 8 billion investment this year. For overall growth of the sector, we urge that the the risk weightage of the sector should be reduced further by making the first charge of the SWAMIH Fund pari pasu.”

Mr Rajan Bandelkar, Vice Chairman, NAREDCO West said, “With the support of the Government and the financial institutions, the real estate sector would soon be able to bridge – up the liquidity deficit and deliver the bankable projects. The foreign funding will increase significantly across asset-classes in the next year.”

Ms. Sigrid Zialcita, CEO, Asia Pacific Real Estate Association (APREA), said, “The volumes in the real estate are increasing due to effective measures such as stamp duty reduction, rationalisation of GST and other reforms. A further rationalisation of GST and the initiatives like stamp duty reduction will help to attract more investments.”

Mr Sandeep Runwal, President – Elect, NAREDCO Maharashtra expressed the need for quicker environment approvals for speedy implementation of housing projects.

During the day’s sessions, eminent speakers analysed the funding environment of the Indian real estate sector. In the session, ‘Financing and Restructuring of Loans’, Shri C. Sreenivasulu Setty, Managing Director, State Bank of India, advocated the need for the real estate sector to corporatize the businesses to fulfil the criteria of the prospective buyers. “The developers who have moved their financing arrangements from the NBFCs to the bank, the loan tenure cannot not be enhanced due to the regulatory requirement,” he added. Looking at the pandemic time, the NAREDCO members urged that the SBI should consider the take-over of loans from other NBFCs and the loan tenure extension for the developers for the next 18 months.

Mr Jitu Viwani, Chairman, Embassy Group stated that the warehousing and co-living and co-working spaces will be the future. Mr Anuj Puri, Chairman and Founder of Anarock Property Consultants said that the joint efforts of APREA and NAREDCO in liasioning with the Government will boost the REITs framework in the country. During the day, key speakers like Mr. Suresh Kozhikote, Managing Director & CEO, SBICAP Ventures Limited, Mr. Vipul Roongta, Managing Director & CEO, HDFC Capital Advisors Ltd, Mr. M. Murali, Managing Director, Shriram Properties, Mr. Yesh Nadkarni, Managing Director Real Estate, KKR, Mr. Amit Goenka, MD and CEO, Nisus Finance Services Co. Ltd. expressed their views.

At the virtual NAREDCO’s ‘Real Estate and Infrastructure Investors’ Summit (REIIS) – 2020 in association with APREA, many eminent experts deliberated on the revival of the real estate sector, opening up of foreign funding opportunities, etc

On the inaugural day, Shri Durga Shankar Mishra, Secretary, Ministry of Housing and Urban Affairs, Government of India announced that the New Tenancy Act would soon be implemented that would remove the complexities and restrictions on the existing rent control laws to increase the supply of affordable housig supply. Another iconic speaker, Mr Keki Mistry, Vice Chairman and CEO, HDFC Limited predicted that the the lower interest rates regime would continue for another six to twelve months that will give the best home buying opportunity for the home buyers.