Govt's Rs 25,000 crore real estate package will help ease distress in the sector, but time is of essence, say analysts

Anuj Puri, chairman at ANAROCK Property Consultants, also cheered the move, saying that this is a critically important move that eliminates the ambiguity which surrounded the timelines for setting up the fund, and its actual implementation.

Many sovereign funds have shown interest in the AIF, which will be managed by SBICAP Ventures, Sitharaman said at a media briefing after a Cabinet meeting.

As per the government’s estimates around 4.58 lakh housing units are stuck in India with over 1,600 stalled realty projects.

Also, the special window will get investments from institutions like Life Insurance Corporation, the State Bank of India, and others which will take the corpus to nearly Rs 25,000 crore. The fund will also be open to other sovereign funds to add to the corpus. More importantly, several non-performing asset (NPA) projects and those facing bankruptcy proceedings under the National Company Law Tribunal (NCLT) shall also be included provided they are not referred for liquidation. This will bring in even more stalled projects into the eligibility criteria and give relief to more aggrieved homebuyers.

Experts believe that this move couldn’t have come at a better time because the delay was causing serious apprehensions. "The delay in the on-ground deployment of the stress fund gave rise to severe apprehensions about the main issues – that of stuck and delayed projects – that had remained unaddressed so far. The timeline for setting up this fund and its actual implementation is quite critical," noted Puri.

Other market experts also echoed similar views.

Shishir Baijal, chairman and managing director, Knight Frank India said: "The inclusion of developments under NPAs and NCLT into the gamut of eligible projects, albeit these are net positive projects, into the special window funding is a welcomed decision.

"The extension of this benefit to mid-income beyond the affordable housing segment is a critical step forward. We welcome these changes and feel that this will help create greater momentum in the stock movement. This step will definitely create greater confidence and credibility and may, in due course, encourage private segments to extend their support in last-mile funding , helping the beleaguered sector to go over this period of a slowdown”.

Meanwhile, Siddhartha Mohanty, managing director and CEO of LIC Housing Finance hailed the government's decision as a masterstroke.

"The Rs 25,000 crore alternate investment fund (AIF) announced by the government on Wednesday to help complete the stalled housing projects is a "masterstroke" by the Centre as it addresses the issues of developers as well as homebuyers."