The government is currently engaging in discussions with bankers and the Reserve Bank of India (RBI) regarding the impasse faced by real estate projects. These stalled projects present potential dangers to both homebuyers and lenders.
According to a report in the Mint, government officials have stated that although the special window for affordable and mid-income housing (SWAMIH) investment fund, initiated in 2019, successfully revitalized numerous projects, additional measures are required.
The SWAMIH Investment Fund I, as per an anonymous government official, has been instrumental in completing 20,557 housing units in the last four years and intends to deliver an additional 81,000 homes across 130 projects in 40 tier-1 and tier-2 cities, pending approvals, while successfully completing the entire process for 11 projects.
According to an anonymous official, the SWAMIH Investment Fund I has played a vital role in completing 20,557 housing units since 2019. The fund has plans to deliver an additional 81,000 homes across 130 projects in 40 tier 1 and tier 2 cities, once all the necessary approvals are obtained.
According to an anonymous official, there are ongoing discussions regarding the need for additional funds for the SWAMIH Investment Fund. The purpose of these potential funds would be to facilitate a more aggressive push in achieving the fund's objectives.
Another official stated that the government is highly motivated to address all the challenges because numerous homebuyers have their investments trapped in these stalled projects. Their intention is to find swift resolutions to alleviate the concerns of these affected individuals.
In addition, the official mentioned that stakeholders, including commercial banks and regulators, are engaged in discussions to explore various solutions. They are actively considering different approaches and strategies to address the issues at hand.
The government is also expressing concern about the risks that lenders face due to incomplete projects. They are mindful of the potential consequences and are working towards mitigating these risks.
According to data from Anarock, a renowned real estate services company, the major seven cities in India were confronted with a significant challenge as of May 2022. A staggering total of 479,940 housing units in these cities were either stuck or experiencing delays in their completion. The cumulative value associated with these units exceeded an astounding Rs 4.5 trillion. This situation highlighted the immense magnitude of the issue and the substantial financial implications it had for the real estate sector in India.
Based on the report by Mint, the majority of delayed or stalled projects, accounting for 77 percent, were concentrated in the Delhi NCR (National Capital Region) and Mumbai. On the other hand, Bengaluru, Chennai, and Hyderabad collectively represented nine percent of the total units affected by delays or being stuck.
The recent meetings organized by the government are a crucial component of their efforts to accelerate the completion of unfinished projects. The Centre is actively working towards ensuring that these projects are successfully concluded in a timely manner.
To address the concerns surrounding stalled real estate projects and propose potential solutions for their completion, the Ministry of Housing and Urban Affairs has established a 14-member committee. This committee, led by former NITI Aayog Chief Executive Officer Amitabh Kant, will examine the pertinent issues and make recommendations accordingly.
Prashant Thakur, the head of research at Anarock Group and senior director, expressed his perspective, stating that the SWAMIH fund's capacity and financial resources are insufficient to address the magnitude of stalled projects. He mentioned that numerous private equity funds are keen on venturing into this domain and are actively engaging in discussions with the government. Their objective is to ensure fair treatment and an equal opportunity to participate, similar to what is provided to the SWAMIH fund.
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