The real estate sector has been grappling with liquidity issues, stalled projects and low housing demand. Many builders have failed to deliver homes to buyers. The government has announced the setting up of Rs 25,000 crore alternative investment fund (AIF) as a relief measure for real estate developers.
SBICAP ventures would manage the AIF. The government has allocated Rs 10,000 crore towards the fund. Life Insurance Corporation, State Bank of India and sovereign funds would also subscribe to the fund.
Analysts expect the relief package to solve the problem of non-performing assets (NPAs) for finance companies and clearing up real estate inventories. The fund could also revive economic activity in one of the core sectors of the economy. The package is positive for the real estate sector reeling under financial stress.
Also Read: The Transition of Investors from Real Estate to Mutual Funds
As per the government estimates, there are over 1,600 stalled real estate projects and around 4.58 lakh unsold real estate units. The government seeks to include RERA-registered net worth-positive projects which are nearing completion. The package would ease cash flows for the developers and facilitate repayment of dues to real estate finance companies.
The cabinet also approved for establishing a ‘Special Window’ to provide priority debt financing to facilitate completion of stalled housing projects in the affordable and middle-class housing sector. The decision would help relieve financial stress for middle-income buyers.
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I am a Chartered Accountant by profession. I specialise in personal taxes and corporate income tax matters. I am an avid reader and track developments in financial markets, economy and other market developments.
