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Home / News / India /  Stressed developers get a lifeline

Stressed developers get a lifeline

Photo: Mint

  • The government has announced a number of initiatives, particularly for stalled projects, such as the SWAMIH scheme
  • In the residential sector, in particular, sales have been largely concentrated in projects by so-called branded developers numbering 15-20 across cities

Continued distress in India’s residential property market has thrown up opportunities for real estate executives to launch new ventures offering stress resolution to both developers and investors.

Continued distress in India’s residential property market has thrown up opportunities for real estate executives to launch new ventures offering stress resolution to both developers and investors.

Despite the apparent revival in recent months, the stress in the residential segment is deep-rooted, with stalled and delayed projects, cash flow issues and an ongoing liquidity crunch.

Despite the apparent revival in recent months, the stress in the residential segment is deep-rooted, with stalled and delayed projects, cash flow issues and an ongoing liquidity crunch.

The government has announced a number of initiatives, particularly for stalled projects, such as the special window for affordable and mid income housing (SWAMIH) scheme that will enable the completion of 71,559 dwelling units across states. But, clearly, that’s not enough.

The government has announced a number of initiatives, particularly for stalled projects, such as the special window for affordable and mid income housing (SWAMIH) scheme that will enable the completion of 71,559 dwelling units across states. But, clearly, that’s not enough.

Srinivasan Gopalan, former CEO and currently vice-chairman at Bengaluru-based realty firm Ozone Group, has co-founded Unitern Advisors Pvt. Ltd to help stressed developers in operational efficiency, financial management, sales and overall strategic management.

Srinivasan Gopalan, former CEO and currently vice-chairman at Bengaluru-based realty firm Ozone Group, has co-founded Unitern Advisors Pvt. Ltd to help stressed developers in operational efficiency, financial management, sales and overall strategic management.

“We can offer end-to-end solutions to run the company after analyzing the pain points and working with the management on a fee-based model. Secondly, we can also help developers in monetizing assets, fund-raising or sell leased assets and generate equity. Finally, we will also work with financial investors who are looking to invest and liaise between them and the respective developers and help them in monitoring their investments," Gopalan said.

“We can offer end-to-end solutions to run the company after analyzing the pain points and working with the management on a fee-based model. Secondly, we can also help developers in monetizing assets, fund-raising or sell leased assets and generate equity. Finally, we will also work with financial investors who are looking to invest and liaise between them and the respective developers and help them in monitoring their investments," Gopalan said.

Gopalan, along with Navin Dhanuka, formerly with Piramal Fund Management, have co-founded Unitern and are managing partners at the firm.

Gopalan, along with Navin Dhanuka, formerly with Piramal Fund Management, have co-founded Unitern and are managing partners at the firm.

In the residential sector, in particular, sales have been largely concentrated in projects by so-called branded developers numbering 15-20 across cities, with buyers remaining skeptical about the others.

In the residential sector, in particular, sales have been largely concentrated in projects by so-called branded developers numbering 15-20 across cities, with buyers remaining skeptical about the others.

After working with real estate companies and, most recently, as CEO-real estate practice at Edelweiss Financial Services Ltd, Ram Yadav is setting up an asset management firm for real estate.

After working with real estate companies and, most recently, as CEO-real estate practice at Edelweiss Financial Services Ltd, Ram Yadav is setting up an asset management firm for real estate.

The firm will focus for the first 3-5 years on stressed asset resolution, and work closely with non-banking financial companies (NBFCs) and funds.

The firm will focus for the first 3-5 years on stressed asset resolution, and work closely with non-banking financial companies (NBFCs) and funds.

“Given that many NBFCs are stuck and don’t want to fund real estate anymore, some of them are outsourcing risk and part of their portfolio where we can step in and manage the investments. Given the liquidity crunch that they have faced in the last 2 years, they also need to exit," Yadav said.

“Given that many NBFCs are stuck and don’t want to fund real estate anymore, some of them are outsourcing risk and part of their portfolio where we can step in and manage the investments. Given the liquidity crunch that they have faced in the last 2 years, they also need to exit," Yadav said.

Yadav’s firm, which will focus on Pune and Mumbai for the next two years, also plans to raise a fund.

Yadav’s firm, which will focus on Pune and Mumbai for the next two years, also plans to raise a fund.

Anuranjan Mohnot founded Lumos Alternate Investment Advisors Pvt. Ltd earlier this year after resigning as CEO of Amplus Capital, an investment firm managed by Ahmedabad-based Lalbhai Group.

Anuranjan Mohnot founded Lumos Alternate Investment Advisors Pvt. Ltd earlier this year after resigning as CEO of Amplus Capital, an investment firm managed by Ahmedabad-based Lalbhai Group.

Lumos is planning to raise a 300 crore fund to invest in stressed real estate projects, but will work on a hybrid model where it will both fund projects as well as do development management with the help of empaneled developers.

Lumos is planning to raise a 300 crore fund to invest in stressed real estate projects, but will work on a hybrid model where it will both fund projects as well as do development management with the help of empaneled developers.

“We plan to start fund-raising after January, given the overall uncertainty over the vaccine. Stressed opportunities are huge in the current scenario and we are looking at the top six cities, including Ahmedabad. Funding is not enough today because stressed developers are finding it tough to sell and gain buyer confidence, which is why we will also undertake rebranding and development of projects to help them sell faster. Under-construction projects are not doing that great unless it’s a highly credible developer and we estimate 70-80% developers have delayed, stressed projects," said Mohnot, managing director and chief executive, Lumos.

“We plan to start fund-raising after January, given the overall uncertainty over the vaccine. Stressed opportunities are huge in the current scenario and we are looking at the top six cities, including Ahmedabad. Funding is not enough today because stressed developers are finding it tough to sell and gain buyer confidence, which is why we will also undertake rebranding and development of projects to help them sell faster. Under-construction projects are not doing that great unless it’s a highly credible developer and we estimate 70-80% developers have delayed, stressed projects," said Mohnot, managing director and chief executive, Lumos.

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