In an attempt to give impetus to the ailing real estate sector, Finance Minister Nirmala Sitharaman on Wednesday announced a Rs 25,000 crore stimulus to revive over 1,600 stalled housing projects covering 4.58 lakh units. However, according to a study by Anarock Property Consultants, as many as 19 lakh units across the top seven cities are under various stages of construction as on Q3 2019 end.

According to the study, nearly 5.76 lakh units were launched in 2013 or before and the remaining 13.24 lakh under construction units have been launched between 2014 and Q3 2019, which is nearly 77% of the total 17.12 units launched during this period. The study also finds that the Mumbai Metropolitan Region and National Capital Region together comprise a whopping 60% share of the total under-construction units across the top seven cities. Around 11.29 lakh units are under various stages of completion in these top two regions alone.

This raises a serious question whether the announced fund is sufficient to cover this entire inventory. Anuj Puri, chairman of Anarock Property Consultants, told The Sunday Guardian that the concern is due to the fact that financial options such as banks and NBFCs have dried up and private equity investors prefer commercial real estate. Experts believe that in the absence of any measures to push demand and sales of these properties, builders will continue to feel the cash crunch as they are not able to generate returns on their investments. It is only when customers continue to buy properties that developers are able to have a steady flow of cash.

“As of now, the funds will only bring relief to those homebuyers who have waited long to get possession of their property but to say that it will prompt other/new homebuyers to immediately begin taking the plunge and thus heighten sales, is not true. It may boost sentiments of most homebuyers rather than converting into actual sales. Both global and domestic slowdown is also taking a hit on consumption and homes being highly expensive in nature come down on the priority list of most consumers. Thus, only measures such as a significant cut in home loan rates or a tax rebate etc., could trigger a higher momentum,” Puri added.

However, many builders whom this newspaper talked to expressed their happiness over the announcement of the Finance Minister. They believe that completion of stalled projects will boost the confidence of consumers, boosting sales.

Anand Gupta, spokesperson of the Builders Association of India, told The Sunday Guardian: “There are demands for completed houses. If they are not sold, they can be rented out and money can be recovered. But due to incomplete projects, money invested in those projects through the home loans and other methods has got stuck. which is affecting the economy as a whole. Thus the announcement will bring back the money stuck in these projects to circulation.”

In the proposed fund, the Centre will infuse Rs 10,000 crore, whereas Rs 15,000 crore will be contributed by LIC and SBI. Real estate consultants are hopeful that this fund will open a window for other foreign funds to add to the corpus. Builders are also hopeful that the announcement will bring some relief to several non-performing assets (NPA) projects and those facing bankruptcy proceeding under the National Company Law Tribunal (NCLT).

According to some estimates, around $25 billion worth of projects are facing insolvency proceedings in bankruptcy courts and there is not much clarity on how many cases the proposed fund will be able to resolve.