21 - 07 - 2020

CREDAI Bengal Daily News Update | 21.06.20

Special situation funds, NBFCs eye investment opportunities in

stressed real estate

Apart from the government-sponsored and SBICAP Ventures-managed last-mile fund for

stuck projects, several large institutional investors are also getting active through their

own distress or special opportunities funds.

The combination of sluggish sales, absence of customer advances and liquidity squeeze are

creating stress for real estate developers and investment opportunities for special situations and

distress funds.

Apart from the government-sponsored and SBICAP Ventures-managed last-mile fund for stuck

projects, several large institutional investors are also getting active through their own distress or

special opportunities funds.

According to industry experts, along with SBICAP Venture’s Rs 25,000 crore fund; there are

several large domestic and foreign funds with funds of more than Rs 35,000 crore looking at

such investment opportunities.

“The current environment will lead to more financial challenges for realty developers. Hence

there will be a need for patient capital and the market will see more last mile funding

transactions along with partial liquidity solutions to existing lenders,” said Vikas Chimakurthy,

CEO, Kotak Realty Fund. “We are receiving investment proposals and continue to evaluate

them.”

One of India’s largest domestic real estate funds, Kotak Realty Fund has raised $1.8 billion so

far and has a significant amount of dry powder ready to be deployed in such assets.

To tap the potential and finance such projects, India’s largest mortgage lender Housing

Development Finance Corp (HDFC) is also looking to invest in real estate funds to finance such

projects.

“These funds constitute a major relief for cash-starved residential realty developers and other

related industry stakeholders, including aggrieved homebuyers. However, their due diligence is

also as high as the rescue potential they offer,” said Vishal Srivastava, President - Corporate

Finance, ANAROCK Capital.

Newspaper/Online ET Realty ( online )

Date July 20, 2020

Link https://realty.economictimes.indiatimes.com/news/industry/special-situation-funds-

nbfcs-eye-investment-opportunities-in-stressed-real-estate/77061034

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According to him, a large part of Rs 35,000 crore funds is coming from US-based and Asian

funds. ANAROCK Capital has already helped raise over Rs 5,000 crore from special situation

funds.

This capital is being raised for projects primarily in Noida, Greater Noida and Guragon in NCR,

Mumbai, Thane, Bangalore, Hyderabad and Pune. The projects in question have anything

between 100-800 units each, with unit ticket sizes ranging from Rs 28 lakh to Rs 15 crore.

“More of these financing deals will start taking place once the moratorium on term loans and

interest payments gets over. The real financial stress will be known then, pushing several

developers and lenders to seek support,” said top official of a leading non-banking finance

company.

The liquidity crisis that started with the default of IL&FS last year has changed the scenario

completely and has led to a drastic reduction in non-banking finance companies lending to the

sector. Not just NBFCs, the funding challenges have hit the real estate sector’s recovery,

prompting more developers to seek support for completion of their stuck projects.

In an instance of such transactions, Indiabulls Housing Finance raised over Rs 2,000 crore from

global stressed assets investor Oaktree Capital by monetizing a part of its realty loans. ECL

Finance, the non-banking finance arm of the Edelweiss Group, also recently sold around Rs

4,000 crore of loans, extended mostly to realtors, to global asset buyers. Ends

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Noida will use drones to map land in 300 villages

Only the inhabited portion of the village where people have built residential properties

would be covered under the Samitva scheme for preparing a comprehensive database of

the residential clusters.

What do hundreds of villages in the district have to do with drones? For the first time, these

unmanned aerial vehicles will be hovering over the skies of 322 villages

under Jewar, Dankaur, Bisrakh and Dadri blocks, flying at regular intervals to capture images of

the land below.

The initiative is part of a scheme that was launched by Prime Minister Narendra Modi on April

24. It was conceived to strengthen the gram panchayats by updating the records of properties

and assets by providing property cards to the household owners. Despite staying in the same

village for several generations, the rural population in Uttar Pradesh does not have any

document to prove ownership of residential land.

Only the inhabited portion of the village where people have built residential properties would be

covered under the Samitva scheme for preparing a comprehensive database of the residential

clusters.

Nodal officer for the scheme, additional district magistrate Diwakar Singh, said that the

schedule is being prepared and ground activity has been initiated across 122 rural villages that

will be covered in the first phase. “By August 15, we would complete the entire project and

cover 322 villages,” said Singh. He added that the revenue department would update the land

records and execute deeds.

“Owner of any residential property in a village would get a property card mentioning the details

of his/her dwelling unit. This will not only settle long-standing disputes but also help villagers

in seeking loans from financial institutions by mortgaging their property,” said KS Yadav,

district panchayat raj officer. The officer added that taxes can also be collected in the future

once the property title gets verified.

Survey of India will provide the drone technology and operate reference station technology for

capturing images and mapping the data.

Meanwhile, Yadav is trying to conduct an awareness program to sensitise villages and create

awareness about the exercise.

Newspaper/Online ET Realty ( online )

Date July 20, 2020

Link https://realty.economictimes.indiatimes.com/news/infrastructure/noida-will-use-

drones-to-map-land-in-300-villages/77062142

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Singh added that Survey of India is likely to confirm the dates by July 25. Across Uttar Pradesh,

more than 53,000 villages have to be surveyed.

________________________________________________________________

Maharashtra CM may scrap fixed rent plan for slum rehabilitation

projects

Earlier this month, as part of the larger reforms in the housing sector and a bid to fast

track slum redevelopment projects, Awhad had announced a slew of reforms.

Housing Minister Jitendra Awhad’s bid to fix the rent paid to slum dwellers living in transit

during redevelopment between Rs 8,000 and Rs 12,000 has become a political hot potato with

netas across party lines opposing the scheme, including some from within the NCP.

According to a senior Sena minister, Chief Minister Uddhav Thackeray is likely to scrap

the fixed rent plan. “We feel the rent must be fixed by the developer and the slum dweller’s

society by mutual agreement. However the other reforms announced have been well received

and will help fast track slum redevelopment. Except the fixed rent plan, all other reforms will be

approved soon with some minor changes,” the cabinet minister said.

Earlier this month, as part of the larger reforms in the housing sector and a bid to fast track slum

redevelopment projects, Awhad had announced a slew of reforms. Among them, the transit rent

to be paid by the developers had been fixed at Rs 12,000 per month for projects in Colaba-

Bandra region, Rs 10,000 per month for Bandra to Andheri/Ghatkopar, and Rs 8,000 per month

for projects in Andheri to Dahisar.

Former Congress minister Naseem Khan said that while he welcomes the reforms, the rent

proposed was very low. “With rents as low as Rs 8,000 per month, slum dwellers will have to

look for housing in satellite towns outside the city,” Khan said. BJP MLA from Mulund, Mihir

Kotecha said, “The state government must stay away from the rent issue. The monthly rent must

be agreed mutually between the slum dwellers and developers,” Kotecha said.

Awhad had announced a stress fund to provide liquidity for completion of stalled Slum

Rehabilitation Authority (SRA) projects and a series of steps that are expected to speed up

approvals process, grant relaxations to developers in premium payments.

A senior Sena cabinet minister said that the CM wasn’t happy with capping the rent. “We are

going to face the BMC elections soon. So politically this move will be a disaster for us. We

can’t hurt slum dwellers this way,” the minister said. According to officials, 370 SRA

projects are presently stalled for want of liquidity. NCP functionary Baban Kanavje has written

to Awhad asking him to rethink the plan. Kanavje has said that right now developers pay around

Newspaper/Online ET Realty ( online )

Date July 20, 2020

Link https://realty.economictimes.indiatimes.com/news/industry/maharashtra-cm-may-

scrap-fixed-rent-plan-for-slum-rehabilitation-projects/77077921

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Rs 15,000 to 17,000 rent to slum dwellers.

On Monday, Awhad said that the rent caps will be reconsidered. “Our priority is to make the

city slum free and ensure fast track redevelopment of all slums. Given the suggestions and

requests that have come from slum dwellers and political leaders, we will rethink the fixed rent

plan,” Awhad said.

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Chandigarh housing board's new push to revive costliest housing

scheme

In its fresh proposal, the CHB submitted that to make it an affordable housing scheme,

there is an urgent need to increase FAR. By offering more space in the flats, buyers will be

interested, the CHB submitted.

In an attempt to revive the city's costliest housing scheme in Sector 53, the Chandigarh housing

board (CHB) has submitted a revised proposal before the UT administration to increase floor

area ratio (FAR) of the scheme.

Last month, the architect department refused the CHB’s proposal to increase FAR.

Newspaper/Online ET Realty ( online )

Date July 20, 2020

Link https://realty.economictimes.indiatimes.com/news/residential/chandigarh-housing-

boards-new-push-to-revive-costliest-housing-scheme/77061980

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In its fresh proposal, the CHB submitted that to make it an affordable housing scheme, there is

an urgent need to increase FAR. By offering more space in the flats, buyers will be interested,

the CHB submitted.

In March, the board had scrapped the city's costliest housing scheme and decided to refund the

amount to the applicants decided by the demand survey.

However, the officers were asked to consider framing of a new scheme with lesser cost. CHB’s

board of directors in a meeting in March had decided that “the proposed general self-financing

housing scheme in Sector 53 needs to be made more lucrative. To reduce the land cost

component, the matter may be taken up with the administration to increase the floor area ratio

(FAR) so that more flats can be constructed. Further, the possibility of some changes in the

specifications and design also need to be explored. Considering that framing a new scheme with

lesser cost and further possible changes may take considerable time, the board has decided to

refund the amount deposited by the applicants…”

There was a poor response to the demand survey of the scheme, as only 178 applicants came up

for 492 flats. The CHB had reduced prices of flats twice and even extended the deadline for

demand survey. After witnessing poor response, the CHB, on January 14, further reduced prices

by 5% to 7%.

________________________________________________________________

Realtors in Ahmedabad disunited over GIHED, Credai and

Naredco

Industry sources said formation of the new body reveals lack of confidence in GIHED-

CREDAI which have not been aggressive enough to raise issues dogging the sector.

The Covid-19 pandemic has played havoc with industries across the world with certain sectors

facing the brunt of it. And the real estate sector is no exception.

During the extended lockdown, real estate association National Real Estate Development

Council (NAREDCO) formed its Gujarat chapter, exposing the disenchantment of realtors with

older representative body like Gujarat Institute of Housing and Estate Developers (GIHED) and

Confederation of Real Estate Developers’ Associations of India (CREDAI).

About 300 developers from Gujarat have already registered with NAREDCO. Of these, about

70 per cent are from Ahmedabad.

Industry sources said formation of the new body reveals lack of confidence in GIHED-CREDAI

which have not been aggressive enough to raise issues dogging the sector.

The distrust has only exacerbated post the lockdown which has thrown the capital-intensive

realty sector into disarray.

NK Patel of Sun Builders has been appointed the chairman of Gujarat chapter of NAREDCO

whereas Suresh Patel of Surya Group has been appointed its president.

Areputed builder said a WhatsApp group of about 300 members has been formed to discuss

issues faced by the sector.

Several new members Mirrortalked to said, “GIHED-CREDAI have lost the purpose for which

it was created — to aggressively represent and fight for interests of the sector. The lockdown

has brought several developers to the edge of going down under. There was a need for a strong

representative body which can fight for the rights of builders and buyers.”

Another realtor said, “The existing bodies got limited to holding cultural activities.”

A developer pleading anonymity said, “The core group in GIHED- CREDAI humiliated anyone

Newspaper/Online ET Realty ( online )

Date July 21, 2020

Link https://realty.economictimes.indiatimes.com/news/industry/realtors-in-ahmedabad-

disunited-over-gihed-credai-and-naredco/77077980

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pointing a finger or raising pertinent issues. In fact, such people were targeted. Many

intellectuals and technocrats stopped participating in association matters due to these reasons.”

Talking to Mirror, N K Patel said, “We feel that GIHED-CREDAI has missed to live up to their

purpose over the last three years. They failed in taking up industry issues aggressively.”

When asked how NAREDCO would address realtors’ issues, Patel said, “We want to work on

futuristic town planning and key issues facing the sector such as reduction in stamp duty and

problems being faced in RERA-2 online portal.

Dipak Patel of Ozone group who has been appointed vice president of NAREDCO, Gujarat

said, “Everyone knows, but no one wants to say it. Right now if a flat costs Rs 1-crore, around

Rs 30 lakh goes to the government in the form of direct or indirect tax. If this is worked out

through a strong dialogue with the government, the benefit can be passed on to the buyers.”

Hinting at GIHED-CREDAI, Patel said, “An organisation must stick to its main motto,

followed by cultural activities.” GIHED-CREDAI president Ajay Patel said, “We are happy that

NAREDCO’s Gujarat chapter has been formed. It will only make the real estate industry’s

voice stronger at State and central government level.”

Commenting on GIHED members also becoming member of NAREDCOGujarat, he said, “It’s

like joining any other club, one can be a member in multiple organisations.”

However, he denied allegations against GIHED-CREDAI’s leadership or intentions. “We have

not received any complaint by email. If that would have been the case we would have known

about it. However, comparing leadership is not the right way as we regularly make

representations to the State government and so far 80 per cent of the work has been accepted,”

he claimed.

Talking about the association, Suresh Patel said, “We have developers, who do work in volume

becoming our members. We don’t want to go in quantity. but want to maintain quality.

Moreover, we want the industry issues to be addressed by the association which wasn’t

happening.”

Patel also pointed out that an association must run by people as trustees and not owners.

Also, one needs to keep his personal relations aside when representing an association to carry

out result oriented work.

________________________________________________________________

Panaji: Repairs of 18 old buildings yet to see the light of day

This is due to the non-cooperation from the property owners despite the insistence of

tenants to repair it, Panaji mayor Uday Madkaikar said.

The collapse of an old building adjacent to the Azad Maidan early Sunday morning has yet

again brought forth the question of safety of occupants.

Even after the Corporation of the City of Panaji (CCP) identified 18 buildings in the city which

were weak, a few years ago, their repairs are yet to see the light of day. This is due to the non-

cooperation from the property owners despite the insistence of tenants to repair it, Panaji mayor

Uday Madkaikar said.

“Many of these old buildings still practice the old rent system. While the tenants want CCP to

repair the building, the owners refuse to grant us a no-objection certificate to do so,” he said.

House repair licence can't be given to the tenant. it has to be given to the owners.

Qualified engineers were brought on board to assess the stability of these buildings, one of

which is the premises of the CCP office. CCP is now seeking legal advice on how to go ahead

with the repairs.

“We have floated a tender two weeks ago to prepare a stability report of the CCP office

building. We will also take legal recourse to obtain a repair licence for other old buildings,” he

said.

Ketak Nachinolkar, a conservation architect, said the rent control act is a complicated law but

structures undergoing deterioration must be protected.

“Any building that shows signs of collapse like leakages, cracks or deteriorating wood must be

evaluated as per its criteria in the interest of safety. Certain buildings are approaching 150 years

and as such the need to evaluate them is important,” he said.

________________________________________________________________

Newspaper/Online ET Realty ( online )

Date July 20, 2020

Link https://realty.economictimes.indiatimes.com/news/residential/panaji-repairs-of-18-

old-buildings-yet-to-see-the-light-of-day/77062227

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