According to a report published today by PropEquity, a Gurgaon-based real estate, research and analytics firm, there are an estimated 13.8 lakh housing units in the mid- to affordable category that are approximately 60% complete and due for completion in the next two years. Out of these units, 7.4 lakh units are stressed and need aid.
However, not all of these units qualify for the last-mile funding announced by the finance ministry on 13 September. The government’s funding package is meant only for residential housing projects in the affordable and middle-income categories, provided the project have not been declared as non-performing assets (NPA) and do not have a case filed against them in National Company Law Tribunal (NCLT). To be eligible for funding, the projects also need to be net-worth positive.
According to the report, “As many as 4.4 lakh units of the total 13.8 lakh units are already on hold due to lack of funds and have been delayed for more than five years. Most of the developers who are responsible for the completion have already been taken to NCLT or are NPAs with the banks. Hence, these units do not qualify for this aid."
The report further estimates that out of the remaining 9.4 lakh units, approximately 7.4 lakh units (80%) lie in tier-1 cities where the total cost to construct a unit is much higher at approximately ₹2,500 per sq.ft. PropEquity has estimated that a balance (last-mile funding) of approximately ₹800 per sq.ft of the ₹2,500 per sq.ft will need to come from the government in order to complete the unfinished projects. The weighted average size per unit is ₹1,500 per sq.ft. Thus, approximately ₹12 lakh per unit (1,500 sq.ft* ₹800) will be required to complete each unit. If this estimate is to be taken into account, there will be a requirement of ₹90,000 crore to complete 7.4 lakh stressed units.
The current fund allocated, if fully utilized, will aid in completing approximately 1.6 lakh units, of which approximately 55% are sold or absorbed. This translates to approximately 91,000 units that have been bought by consumers getting the government relief.