July 13, 2021 - CREDAI Bengal Homes

July 13, 2021

CREDAI Bengal Daily News Update | 13.07.21

 Newspaper/ Online Money Control (Online)
 Date               July 12, 2021
                   https://www.moneycontrol.com/news/business/real-estate/actual-
 Link              implementation-of-pmay-falls-below-scheduled-targets-icra-
                   7159281.html

   Actual implementation of PMAY falls below scheduled targets:
                             ICRA

The allocation towards the PMAY-U in the Union Budget has been reduced to Rs 8,000 crore for
FY2022, against a revised estimate (RE) of Rs 21,000 crore for FY2022
The actual implementation of the Pradhan Mantri Awas Yojna (PMAY) has fallen below the
scheduled targets and would require a substantial push going forward, an ICRA analysis has said,
pointing out that the performance is also likely to get impacted in FY2022 on account of COVID-
19.
In terms of expenditure too, in aggregate, out of the required Rs 4.70 lakh crore, Rs 2.97 lakh
crore has been incurred in the last five years but a whopping Rs 1.71 lakh crore (~37%) of the
expenditure would be required to be incurred within the next 1.5 years to complete the
construction of the balance units by 2022 to meet the near-term scaled down target, it noted.
Under the PMAY-U, against a revised target of 11.2 million units, almost entire 11.2 million
housing units has been sanctioned and 4.8 million houses have been completed, leading to the
completion of only 43% of the near-term target as well as the sanctioned units under the PMAY-
U.
The scheme was launched in 2015, through which the government had set a target of constructing
50 million new housing units by 2022, of which 30 million units are proposed to be constructed
in the rural areas (through PMAY-Rural) and 20 million in the urban areas (through PMAY-
Urban).
Subsequently, the government has set a scaled down near-term target of 21.4 million under
PMAY-R and 11.2 million units under PMAY-U by 2022.
“With 1.5 years to go, against the revised targets, 19.55 million houses have been sanctioned and
14.16 million have been completed through PMAY-Rural till April 2021, implying completion
of 67% of the revised target and 72% of the sanctioned houses. Further, 9% of the houses have
not been sanctioned so far,” says Kapil Banga, assistant vice president and sector head, ICRA.
Under the PMAY-U, against a revised target of 11.2 million units, almost entire 11.2 million
housing units has been sanctioned and 4.8 million houses have been completed, leading to the
completion of only 43% of the near-term target as well as the sanctioned units under the PMAY-
U. Thus, a significant pick-up in the implementation pace for both, the PMAY-U and the PMAY-
R, will be required to achieve the Housing for All target by 2022, he said.

In terms of funding, the allocation towards the PMAY-U in the Union Budget has been reduced
to Rs 8,000 crore for FY2022, against a revised estimate (RE) of Rs 21,000 crore for FY2021 and
the same has remained stagnant when compared to the budget estimate (BE) of Rs 8,000 for
FY2021.
The allocation towards the PMAY-R in the Union Budget has remained at Rs 21,000 crore for
FY2022, the same as the revised estimate (RE) and the budget estimate (BE) for FY2021. Though
the extra budgetary resources (EBR) for PMAY-R have been increased from Rs 10,000 crore to
Rs 20,000 crore in BE of FY2022 against Rs 10,000 crore in FY2021; the EBR for PMAY-U for
FY2022 is nil, against Rs 10,000 crore in BE of FY2021, the analysis said.
Thus far, the government has allocated/committed Rs 2.72 lakh crore and incurred Rs 2.02 lakh
crore (74%) out of the total estimated requirement of Rs 2.88 lakh crore for the revised targets of
PMAY-R, leaving pending commitment/allocation of Rs 16,000 crore and pending expenditure
of Rs 86,000 crore.
Further, it has allocated/committed Rs 1.81 lakh crore and has incurred only Rs 0.95 lakh crore
(53%) out of the total estimated requirement of Rs 1.81 lakh crore towards the revised targets
under the PMAY-U.
“Thus, in aggregate, out of the required Rs 4.70 lakh crore, Rs 2.97 lakh crore has been incurred
in the last five years but a whopping Rs 1.71 lakh crore (~37%) of the expenditure would be
required to be incurred within the next 1.5 years to complete the construction of the balance units
by 2022 to meet the near-term scaled down target.
However, in terms of expenditure trend, the actual consolidated expenditure on PMAY in FY2020
was Rs 25,000 crore, the RE for FY2021 was Rs 40,500 crore, while the aggregate budgetary
allocation for FY2022 is only Rs 47,500 crore (including budgeted EBR), thus a large gap of Rs
1.24 lakh crore is required to be plugged in the next 1.5 years to meet the near-term target,” said
Banga.
Although the Cabinet had approved a Rs 60,000-crore dedicated affordable housing fund – the
National Urban Housing Fund - in 2018 to support the PMAY programme implementation, a
considerable portion of the same has already been utilised, raising the need for more allocation.
In the absence of a substantial ramp-up in budgetary allocation, the execution could continue to
lag, while the dependence on extra budgetary resources is likely to remain elevated.
Thus, the ability to provide the required EBR to plug the gap would be critical to meet the
financial spending and consequently the physical completion targets within the stated timeline. It
remains to be seen what additional avenues the government will tap into to raise such financing
to expedite the implementation of the scheme, the analysis said.
_______________________________________________________

Newspaper/ Online Money Control (Online)
 Date               July 12, 2021
                   https://www.moneycontrol.com/news/business/real-estate/pe-
 Link              investment-inflows-into-real-estate-in-2021-q2-decline-by-54-
                   compared-to-q1-report-7160061.html

  PE investment inflows into real estate in 2021 Q2 decline by 54%
                     compared to Q1: Report

The decline is partially because of slow decision-making in Q2. Typically Q1 sees a high quantum
of investments as deal closures spill to the first quarter.
Private equity investment inflows into the real estate sector stood at $2.7 billion during the first
half but the second quarter of 2021 saw an investment of $865 million which is a 54 percent
decline from the previous quarter, as per the latest report by Savills India, a global property
consultancy firm.
The decline is partially because of slow decision-making in Q2; however, typically Q1 sees a
high quantum of investments as deal closures spill to Q1, it said.
This inflow in the first half is equivalent to 41 percent of the investment that the sector saw in the
entire year of 2020, an indication that investors’ confidence remains intact despite the pandemic-
induced slowdown.
As per the report, commercial office assets remained the frontrunner during Q2 2021, garnering
about 40 percent share of the investment pie. This is on the back of the resilience displayed by
the investable grade office assets, reflected in the successful listing and operations of the three
REITs in India.
While occupancy levels in Embassy Office Parks REIT and Mindspace Business Parks REIT
declined marginally by 1-2 percentage points at the end of March 2021 as compared with those
in December 2020, the rents remained stable during this period. Brookfield India REIT executed
a successful IPO with an eight times subscription, with strong participation from a diverse mix of
marquee investors.
"Amid the ongoing pandemic, the first half of 2021 saw some marquee deals by both foreign and
domestic investors in the commercial office segment. This demonstrates the strong inherent
demand and resilience of the office market while reaffirming confidence of investors into the
sector. Consistent performance by some of the large foreign institutional firms in core assets has
shown global investors the potential scope of investing in Indian real estate. We expect to see
more such transactions in the near future as well,” said Diwakar Rana, Managing Director,
Capital Markets, Savills India.
During Q1 2021, the consumption pattern across investable grade retail assets displayed a positive
picture as it recovered swiftly to pre-COVID levels of Q1 2020.

Savills India’s research witnessed a renewed interest in the retail segment by private equity
institutional investors as the segment accounted for the second-highest share (33 percent) of
investment inflows during Q2 2021.
Foreign investors such as CPPIB and GIC formed platforms to invest to the tune of $285 million
in retail assets in the cities of Kolkata, Mumbai, and Pune.
_______________________________________________________

Newspaper/ Online ET Realty(Online)
 Date              July 13, 2021
                   https://realty.economictimes.indiatimes.com/news/industry/sc-verdict-
 Link              banks-explore-option-of-invoking-personal-guarantee-of-
                   promoters/84367202

SC verdict: Banks explore option of invoking personal guarantee of
                           promoters
Erstwhile promoter Wadhawan stands guarantee to loans taken by DHFL, which is sitting
on debt of about Rs 90,000 crore, while Dhoot has also given personal guarantee to a portion
of Rs 22,000 crore loan to Videocon.

Armed with Supreme Court order, banks may invoke personal guarantees of tycoons ranging
from Venugopal Dhoot to Kapil Wadhawan to recover unpaid loans from their delinquent firms,
sources                                 said                                      Monday.

According to an estimate, top 10 personal guarantors have guaranteed debt of over Rs 1.6 lakh
crore. Among the big names, former promoters of Bhushan Steel and Power Sanjay Singhal and
his wife Aarti Singhal had furnished personal guarantees worth up to Rs 24,550 crore to take
loans from a consortium of bank led by State Bank of India (SBI).

The former promoter of Reliance Communications, Anil Ambani, has also given personal
guarantee against the loan taken. Erstwhile promoter Wadhawan stands guarantee to loans taken
by DHFL, which is sitting on debt of about Rs 90,000 crore, while Dhoot has also given personal
guarantee     to     a     portion     of     Rs    22,000      crore    loan      to Videocon.

The Supreme Court in May had held that the November 15, 2019 government notification
allowing creditors, usually financial institutions and banks, to move against personal guarantors
under the Insolvency and Bankruptcy Code (IBC) was 'legal and valid'.

Post the judgement, a senior official of public sector bank said banks are assessing the level of
involvement of those directors who pledged their personal guarantee against the loan.

After assessment, another banker said, banks would move National Company Law Tribunal
(NCLT) for invoking personal guarantee as part of the recovery process.

The official said that banks have started receiving calls from some of the promoters for exclusion
of their personal guarantee from the non-performing assets. Some of them are coming forward to
resolve         bad        loans         to       save         their       personal        wealth.

Most of the promoters thought that once their case is admitted under IBC, their past sins and
obligations              cease,                the               official                said.

However, the order has generated fear among the promoters and directors who pledged their

personal guarantee of loosing their personal wealth as part of resolution process, the official said,
adding, the personal guarantee angle would expedite the resolution process as the guarantor stands
risk                 of                loosing                   personal                  property.

Creditor-debtor relationship has got a leg up and this will minimise chances of default in the
future.

The concept of 'guarantee' is derived from Section 126 of the Indian Contracts Act, 1872. A
contract of guarantee is made among the debtor, creditor and the guarantor. If the debtor fails to
repay the debt to the creditor, the burden falls on the guarantor to pay the amount.

The creditor reserves the right to begin insolvency proceedings against the personal guarantor if
the latter does not pay. Usually, promoters of big businesses submit personal guarantees to
creditors         to         secure          loans        and         assure          repayment.

During the hearings, the government had justified the November 2019 notification extending
bankruptcy proceedings to personal guarantors. Attorney General K K Venugopal argued that by
roping in guarantors, there was a greater likelihood that they would "arrange" for the payment of
the debt to the creditor bank in order to obtain a quick discharge.

________________________________________________________________

Newspaper/ Online ET Realty(Online)
 Date               July 13, 2021
                   https://realty.economictimes.indiatimes.com/news/industry/renewed-
 Link              business-confidence-prompts-top-realtors-aim-higher-sales-
                   acquisitions/84367119

    Renewed business confidence prompts top realtors aim higher
                        sales, acquisitions
While land prices and deal terms are yet to turn very attractive, most developers believe
that with no support to smaller developers in terms of interest moratorium from banks this
year, unlike the relief offered last year, acquisition opportunities could be strong over the
next 12-24 months.

Top real estate developers expect to double their sales over the next 3-4 years driven by robust
demand, increasing affordability and industry consolidation, CLSA said in a report on India’s
property                                                                                industry.

Improved revenue and collections should boost cash flows, helping these companies further
reduce                                                                              debt.

“The top 10 listed developers have lowered their net debt by nearly 27% in FY21, despite lower
collections (declined nearly 16% in FY21), mainly due to cost control,” CLSA said. “Led by
strong sales in FY20-21, most residential developers are targeting strong cash flow generation
over     the     next    few     years     and     expect      to    lower    debt     levels.”

According to CLSA, overall industry sales declined 34% in 2020-21 across top 7 cities. However,
sales   of    top   10     listed    developers     increased   8%      during      the   year.

CLSA said Lodha Group, DLF, Godrej Properties, Sunteck Realty and Prestige Estates are
among the developers aiming to double their revenue in the next 3-4 years.

With renewed business confidence, realty developers are also seeking to ramp up new project
acquisitions.

“We have entered into four new joint development projects in the last few months and are seeing
a lot of interest from land owners and other developers to partner with us in our growth journey,”
said Abhishek Lodha, MD, Lodha Group. “We believe that housing is at the start of a multi-year
bull       run       that    will     see      growth       in     prices      and      volumes.”

While land prices and deal terms are yet to turn very attractive, most developers believe that with
no support to smaller developers in terms of interest moratorium from banks this year, unlike the
relief offered last year, acquisition opportunities could be strong over the next 12-24 months.

“Consolidation across the industry has already provided us with 3 new project acquisitions

at Vasai, Vasind and Borivali in Mumbai Metropolitan Region (MMR),” said Kamal Khetan,
CMD, Sunteck Realty. “Going forward, we expect to leverage our brand, sound financials and
management            expertise         to           continue          to          grow.”

The ongoing consolidation in the real estate sector has accelerated due to the outbreak of Covid19
pandemic. Large established and listed realty developers have gained more market share in terms
of sales and liquidity as homebuyers are relying more on developers’ execution track record and
sound       financial      position     to      take      the      project      to      conclusion.

Experts       say       that      all      trends       point      toward        an       upcycle.

“One needs to think from both the demand and supply perspective to understand the cycle. The
differential between borrowing costs (home loan rate) and rental costs is at decadal lows. This,
combined with reduction of stamp duty by a few state governments, has made owning a house
attractive,” said Abhishek Murarka, Head of Community, Multipie, an investment community
start-up. “At the same time, supplies are witnessing consolidation in favour of larger
developers…,       making    the    outlook    for    Tier    I     developers     favourable.”

According to industry experts, better demand prospects, strong balance sheets and adequate
liquidity are likely to enable larger developers to garner a bigger share of the seemingly
fragmented but rapidly consolidating market.

________________________________________________________________

Newspaper/ Online ET Realty(Online)
 Date               July 13, 2021
 Link              https://realty.economictimes.indiatimes.com/news/industry/over-100-
                   realty-projects-have-no-valid-registration-up-rera/84366997

    Over 100 realty projects have no valid registration: UP-RERA
In fact, these builders are in a catch-22 situation as they do not have funds to pay up their
dues to the respective industrial authority for which their plans are not getting periodic
review.

 The second wave of the pandemic seems to have dealt a severe blow to the already ailing real
estate sector. In Noida, Greater Noida and Ghaziabad, for instance, over a 100 realty projects are
currently functioning sans sanctioned maps and registrations, according to the Uttar Pradesh Real
Estate Regulatory Authority (UP-Rera). Affected are lakhs of homebuyers who have sunk their
life                  savings                in                   these                  projects.

In fact, these builders are in a catch-22 situation as they do not have funds to pay up their dues to
the respective industrial authority for which their plans are not getting periodic review. With plans
not reviewed and stamped by the authority concerned, officials said, the UP-Rera is also not
renewing their registrations without which they are not able to secure loans to help settle the
government                                                                                     debts.

Balvinder Kumar, member of UP-Rera, told TOI, “It’s a chain of financial logjam which has
precipitated over the pandemic period, derailing over a hundred projects in Noida, Greater Noida
and Ghaziabad. We have started meeting these builders to secure their compliance but most of
them have liquidity issues. We are going to find a way to help them out of the tight spot through
some                                                                                     bailout.”

With immediate revival seeming out of hand, many builders could be on the brink of a major
financial deficit, if Rera is to be believed. Lakhs of buyers are impacted because of these builders,
Rera                                            officials                                       said.

Kumar said, “We have given two pieces of advice to the builders. Those who are on the verge of
completion, we have asked them to complete construction fast and work towards getting the
completion and occupation certificates from authorities. Some recoverable dues from buyers
would help them in cash flow. For those who are far from completion, there has to be some kind
of      bailout      so       that      the       homebuyers        do       not       suffer.”

According to RK Arora, the president of builders’ body Naredco-UP, cash flow has always been
a problem in the industry. “It has escalated during the pandemic. The builders are not being able
to regulate their financial commitments. There is an urgent need for the government to step in to
help     the     cash-strapped    developers,     we     have    made      multiple    requests.”

Kumar said that builders already have one-year relaxation on registration validity and the UP-
Rera has given an additional exemption of six months for all under-construction projects from
March 2021.

________________________________________________________________

Kind Attn. Members

Dear Members,

You would be happy to note that after sustained persuasion by CREDAI Bengal, the State
Government has responded by reducing circle rates by 10% and stamp duty by 2%, as a
temporary measure to boost the real estate industry, vide copy attached.

This temporary benefit will be available for all properties for which the execution is done
on or after 9th July, 2021 and the same is registered on or before 30th October, 2021

If you have any issues or need any clarification pertaining to the notification, please send in
your questions and queries by 13th July, 2021 by 3PM so that we can compile the same and
take it up with the concerned authority for appropriate resolution.

You are requested to mail your questions and queries at tathagata@credaibengal.in

Regards,
CREDAI Bengal Secretariat

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