Corporates venturing into realty sector to weave a new growth path for the beleaguered sector

Mani Rangarajan, Group COO,  Housing.com, Makaan.com and Proptiger.com

It’s good news not only for the homebuyers but also for the real estate industry and the financial institutions including banks and the housing finance companies.

The news is that the corporate are showing increasing interest in the realty sector. The more they enter the realty sector, the better it would be for the sector which has gone through the rough patch during the last couple of years.

Although with the rapid spread of COVID19 across country, will impact the growth of sector for next few quarters but hopefully with the right steps that Government is taking to eradicate the virus, will ripe fruit and the long-term growth story is intact for the sector.

Big corporate moves:

NBCC takes over Jaypee project

The takeover of the debt-laden Jaypee Infratech Limited by the state-owned NBCC is actually happening and has rekindled the hopes of homebuyers who have suffered long period of uncertainty. They will be finally getting their promised dream flats.

Jaypee Infratech, it may be recalled, went into Corporate Insolvency Resolution Process (CIRP) in August 2017. The process took time and the NBCC’s proposal got the green signal after the requisite majority of stakeholders favoured it over the Mumbai-based real estate firm Suraksha Realty.

This is definitely a very good news for over 20,000 homebuyers across various housing projects launched by Jaypee Infratech in Noida and Greater Noida. The NBCC has promised to complete over 20,000 flats in the next three-and-a-half years.

Adani takes over prime property of Aditya Estates

In another significant development, the Adani Group will be acquiring a prime residential property for Rs 400 crore in the national capital after winning the bid to acquire Aditya Estates under the corporate insolvency resolution process.

Aditya Estates holds a 3.4 acre of prime residential property near Mandi House in New Delhi.

The National Company Law Tribunal (NCLT) has approved the resolution plan of Adani Properties to acquire Aditya Estates for Rs 400 crore. This would include Rs 265 crore towards property and Rs 135 crore for meeting other statutory obligations.

More significant than the takeover of the residential property by the Adani Goup was the keen interest shown by corporate in the real estate sector. The list of applicants interested in acquiring the property included NR Narayana Murthy, Malvinder Singh, Anil Rai Gupta, Paras Pramod Agarwal, Dalmia Cement (Bharat), Veena Investments, Welspun Logistics, Adani Properties and Panch Tatva Promoters.

However, only two of them –Adani Properties and Veena Investments–submitted their resolution plans. Of the two, the Committee of Creditors (CoC) approved the bid of Adani Properties.

New unmistakable trend

Besides, there are other examples of corporate showing keen interest in the real estate sector. This unmistakable trend is a definite pointer to the sustained revival of the real estate sector in the country.

Secondly, the builders and real estate companies too have become wiser and learned their lessons, though after suffering huge losses and undergoing prolonged trauma of downtrend.

The realty players are now going in for joint ventures with landowners as well as corporate rather doing everything on their own. Thus the risk as well as rewards will be shared among different stakeholders.

Conclusion

Seeing these developments as a whole in the real estate sector, backed by the untiring efforts of the Modi government, one can only conclude that the real estate sector is on the cusp of recovery and prolonged period of growth, which may not be dramatic but will definitely be sustained for the benefit of everyone.

Little doubt, the current pandemic is one of the biggest crisis humankinds is confronted with. With lockdown and restrictions imposed across the globe, the economic activities are adversely impacted. The real estate is also bound to feel the resonance of it. However, the sector has been passing through a challenging time over the last few years and there is a limit to fall from the current levels. Also, amid the sharp correction in other investment tools including equities and fixed return tools, real estate may start getting renewed attention as an investment alternative.