Piyush Gupta, Managing Director - Capital Markets & Investment Services, Colliers shared his opinion, “There are banks who do certain level of financing but when it comes to flexible funding towards land there are very few. The global capital providers mostly invest in commercial yield generating assets. There is a dire need for last mile funding for the housing real estate developers.”
Sachin Bhandari, Executive Director & CEO, VTP Realty expressed, “After IL&FS debacle, industry has struggled very badly. There are only a few banks providing
construction funding as the nationalised banks have very less exposure towards real estate. Such a scenario provides a golden opportunity for NBFCs for lending to good developers.”
Shailesh Puranik, Chairman & Managing Director, Puranik Builders added, “Where are the institutions who are lending in the market, those who are there in the market they are talking about shifting from wholesale to retail. But, if there is no wholesale lending happening in the real estate industry, there is no business for retail.
Puneet Bhatia, Senior Director, ICICI Venture Funds Management Company Ltd shared the bankers perspective, “As per RBI, banks cannot fund land, therefore the developers have been going the private equity route for the same. In construction finance the democratization of capital is not happening. Inflow of capital into India has been steady. But, in real estate that has been going to a limited set of developers. The developers need to build a good track record from the financial perspective. NBFC cannot fund a project until all approvals are in place.”
Sushant Shetty, Partner - Real Estate & Infrastructure - Western Region, Fox Mandal & Associates LLP, Solicitors & Advocates stated the legal standpoint, “PE investors go by their own risk tolerance level and developer’s expertise in his asset class. Funding is not a challenge, there are a lot of avenues and newer options coming in but, the investors want sustainable and stable assets and projects.” PLANNING CAPITAL STRATEGY
Piyush Gupta reiterated the demand of real estate for infrastructure status and added, “This industry needs capital and has been lobbying for getting the infra status. Opportunities are huge but the capital is not enough for the overall development. Demand for housing is very strong across markets which is clearly seen in the last two years however, we are not seeing that kind of exuberance in investors to invest in residential real-estate. The housing developers will have to give confidence to the investors to put equity in residential.”
Puneet Bhatia said, “According to me the residential real estate is unpredictable, in spite of all the data available. Equity means you have to fund within the lifecycle of the fund. There have been instances where the projects get delayed because of the reasons beyond anybody’s control. Lot of institutional investors do not want to take that risk.”
Sushant Shetty on an optimistic note said, “As the sector gets more and more corporate, newer structures of finance will come in. RERA has brought a degree of level playing field and the perception that real estate laws are a hindrance is slowly fading, though a lot need to be done in terms of dispute resolutions.”
Shailesh Puranik said, “We are all working on non-existent or wafer-thin margins. Land prices and raw material costs are moving up while end user’s prices are not moving in that ratio. SWAMIH like financial structures have to evolve.”
Sachin Bhandari added, “The cascading effect of the real estate sector on other industries is tremendous. Government needs to play a bigger role in addressing the challenges of the sector at policy and financing level given the ever-growing needs of the country and the scale of urbanization.”
- Investors are non-existent in the market because there is no real-profit left in this industry.
- Real estate developers need funding at the land level as it is capital-intensive.
- Today options for early-stage development are non-existent.
- There is lack of patient capital available at the right kind of interest rate.
- One SWAMIH is not enough for the kind of real estate market that we have today and it is growing.
- Consistently residential exposure of foreign investors is going down.
- Real estate is a fragmented industry. If the developers can come together to create a system of financing and lending, it will see the right projects getting the required funds.
.jpg)
.jpg)
