60% of 400 delayed realty projects may get fund fillip

Jaipur: The revival fund of Rs 25,000 crore cleared by the Union Cabinet is expected to bring relief for many developers and consumers in Rajasthan where the real estate sector has been in the throes of a prolonged slowdown that has affected about 400 projects comprising big and small.

The 400 projects, a back-of the envelop estimation by the leading industry body of the sector Credai, includes NPAs, delayed and projects that stand feeble chance of revival.

Sunil Jain, president of Credai-Rajasthan, said that rough calculation suggests that Jaipur has about 60 such projects, while NCR area that includes Bhiwadi and Neemrana has a bigger share of the stalled units.

“We expect about 50-60% of the 400 projects will be eligible for the revival fund. Bank lending has been hard to come by for the sector resulting in large number of projects getting delayed. The package will also help buyers who have been unable to pay their EMIs. The overall impact will be good not only for the real estate industry but other sectors like steel and cement which depend on it,” said Jain.

Jain said viable projects have been delayed because of fund unavailability. Banks has developed a cold feet to finance projects after they were saddled with high levels of NPAs.

The industry in Rajasthan has been under pressure since 2013 but demonetization and GST dwelt a severe blow erasing any hopes of revival despite price corrections.

Nitesh Agarwal, director a leading real estate company in the state, said that the move by the Central government will boost the sentiment of the market and the buyers.

“At this moment, it is hard to predict how many projects and customers will be eligible for the relief but surely the move will improve the sentiment of the market, including buyers and builders. Let’s hope this becomes the turning point the sector was looking for a long time,” added Agarwal. Customers who have been unable to pay their EMIs are also like to a get a credit line of up to Rs 1 core which can again improve the cash flow of the builders.

But some developers said that it all boils down to how the economy is performing in the coming quarters. “If the economy still remains in the slowdown mode, the revival fund will not have a material impact and the initial optimism will fizzle out,” said a builder. However, in the past few months the demand for housing seems to have revived. Jain had said that 10-fold rise in registrations is a good indication of how buyers are now coming back to the market.