Page 16 - Banking Finance January 2020

HOUSING

India ranks 47th out of 56 countries in housing price Indiabulls Housing rallies

appreciation: Report for 3rd straight session
The report ranked India at the 47th spot among the 56 countries/territories on timely payment of in-
tracked, in terms of appreciation in residential real estate
prices, with a marginal 0.6 per cent year-on-year (YoY) terest/principal
rise in home prices. Knight Frank released its latest report Shares of Indiabulls Housing Finance
-- Global House Price Index Q3 2019 -- that tracks the gained for
movement in mainstream residential prices across 56 the third
countries and territories worldwide using official statistics. consecu-
The report ranked India at the 47th spot among the 56 countries/territories tive session
tracked, in terms of appreciation in residential real estate prices, with a mar- on December 31 following timely
ginal 0.6 per cent year-on-year (YoY) rise in home prices. "Slow sales, high in- payment of interest/principal related
ventory and lack of liquidity with developers have restricted rise in home prices," to NCDs. The stock gained more than
the report said. 5 percent in three consecutive days
and climbed over 2 percent intraday
The regulations imposed by the government to ensure accountability in the January 1. It was quoting at Rs
system such as the Real Estate (Regulations and Development) Act, 2016, Goods 310.70, up Rs 3.95, or 1.29 percent
and Services Tax Act and the Benami Transactions (Prohibition) Amendment Act, on the BSE at 1047 hours IST.
2016 have laid the foundation for a healthy end-user market.
The housing finance company on De-
The Buy-To-Let Model Can Breathe New Life Into India's cember 27 and December 30 said it
made timely payment of interest/
Dwindling Real Estate Sector principal (as the case may be) in re-

Finance Minister NirmalaSitaraman has recently announced the setting up of spect of the secured redeemable
an INR 25,000 Cr alternative investment fund (AIF) for non-convertible debentures (NCDs)
stalled projects in the affordable and middle-income issued by itself on private placement
housing segment. This comes as a welcome respite for basis. Towards the end of last month
India's ailing real estate developers, who have been and earlier this month, the company
struggling with unfinished projects owing to the severe redeemed (bought back) secured,
liquidity crunch. redeemable, non-convertible deben-
tures of face value Rs 10 lakh each.
The government has earmarked INR 10,000 Cr towards the fund, and the State
Bank of India and Life Insurance Corporation (LIC) will contribute the remaining "We have taken an initiative to buy
amount. According to government estimates, 1509 housing projects compris- back some of the securities maturing
ing of approximately 4.58 lakh housing units fall in the stalled category, of which in 2021. We will be buying back
around 90% should be eligible or the new fund. bonds worth Rs 1,000-2,000 crore
between now to January while we
Challenges Plaguing India's Real Estate Industry will be rolling back wholesale book
between now to March 2020 by Rs
The establishment of this crisis fund is a positive move, but it fails to address the
7,000 crore or $1 billion," Gagan
multitude of challenges plaguing the real estate space. Especially, the residential
Banga, Vice Chairman and Managing
real estate sector has witnessed a decline in sales and investments due to weak
Director at Indiabulls Housing Fi-
demand, high taxation, defaults and the rippling effect of the NFBC crisis.
nance told CNBC-TV18.
Adding to this is the fears of an impending economic slowdown, which can
worsen the skewed demand-supply balance. As per industry experts, even if the He feels the worst for the housing fi-
AIF fund is utilized efficiently and it can cover only a fraction of India's total nance sector is behind. "Operating
stalled instruction. Another area of concern is that if the majority of these profit continues to remain around Rs
projects get completed but remain unsold, they will just add to the inventory of 800 crore. Gross NPA will be between
1.5-2 percent," said Gagan Banga.
unsold housing units in India.

16 | 2020 | JANUARY | BANKING FINANCE