‘Only developers who are lean and mean will survive’, says President of National Real Estate Development Council

In the midst of an extended slowdown, the country’s real estate sector has been having a hard time over the past few years.

Published: 16th July 2019 08:25 AM  |   Last Updated: 16th July 2019 08:25 AM   |  A+A-

Niranjan Hiranandani, President, NAREDCO

Niranjan Hiranandani, President, NAREDCO (File Photo)

By Express News Service

In the midst of an extended slowdown, the country’s real estate sector has been having a hard time over the past few years. With a series of measures having been taken by the authorities now, Niranjan Hiranandani, president, National Real Estate Development Council (NAREDCO) speaks to Anuradha Shukla on the outlook for the sector. Excerpts: 

The sector has been facing slowdown over the last few years. Do you see a revival ahead? 

When you talk about the slowdown, the situation is very different in the Delhi-NCR region and the other parts of the country. Mumbai is a difficult market, but still..take Bangalore, Pune, etc., a situation in the rest of India is as bad as Delhi NCR. Pan-India, there has been disruption from RERA, demonetisation and then GST. Post GST, many people postponed purchases in ongoing projects which impacted sales across the country in a major way. This, compounded with a liquidity crisis, made the situation really difficult for the sector. 

Both the RBI and the centre have taken measures to resolve tight liquidity conditions. How is the situation currently? 

Post RERA and demonetisation, liquidity requirements increased for the sector. At the same time, banks did not give money to the real estate sector, though they have a lot of cash post demonetisation. They gave more money to NBFCs, which in turn gave to realty. So, NBFCs took care of the liquidity, till the IL&FS crisis happened. Post IL&FS, banks have stopped lending to NBFCs and the crisis has been accentuated. 
The government has pumped some liquidity and, according to me, the system requires about Rs 50,000-Rs 60,000 crore more to solve this problem. I hope, in a few months, the situation will improve and will become normal. But, NCR is a different cup of tea. 

Why is the situation so bad in Delhi-NCR? As head of NAREDCO, what solutions would you suggest to solve this? 

Noida and Greater Noida have very different problems, which goes beyond just liquidity. Then, there are three institutions involved in the resolution of stressed projects. First is IBC, second is the court and the third is RERA. Now for IBC, the prime objective was to secure lenders.

Buyers were included later on... 

We at Naredco suggested that you need to create a stress fund on the basis of last paid funds and the first recovery will go to the stressed fund. We have recommended this to the Niti Aayog and the PMO. NITI Aayog said yes, but noted that it was not able to take it forward because there are three agencies involved. It should treat it as a disaster and solve the problem unilaterally. 

Are you happy with the Budget proposals for the sector?

One big ticket reform was the rental housing policy. We have been pushing for this policy for the last five years. It is going to solve many problems and will relieve a lot of stress in the housing sector. There are so many houses which are locked purely because no one is sure if they rent, whether they will get their house back from the tenants or not. In the next five years, you will get many rental housing plots available across the country.

Many small businesses have either been merged with large groups or disappeared. Going forward, what kind of developers are going to survive?

Once the liquidity problem is fixed, 30 per cent of businesses will spring back. Another 30 per cent will be able to survive. The rest of them will not be able to recover and will disappear, as the damage is beyond repair for them. Going forward, only those who are leaner and meaner will be able to survive, irrespective of their size.

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