HIGH HOPES ON HOUSING

Will the Pradhan Mantri Awas Yojana and incentive schemes announced in the Union Budget, trigger the demand cycle? Talk about an action-packed year! With RERA, GST, the Benami Act, FDI reforms, and more, there was never a dull moment in 2016. Adding to it all was the landmark day for India- November 8, 2016 - when demonetisation was announced. It is also perceived as a year of maximum judicial activity when it came to realty, or as Rohit Gera, Managing Director, Gera Developments, terms it, ´aggressive judicial intervention.´ He says, ´Never before have we seen such harsh words, punishments and orders issued by consumer forums at state high courts and the Supreme Court for developers.´ However, Gera is quick to add, ´It has happened with good reason and some courts were justified in taking action.´ The year that was The first-half of 2016 witnessed early signs of revival, as reflected in improved sales and a drop in unsold inventory levels across top residential markets in India (compared to H1, 2015). India´s real-estate sector appeared to be reaching an inflection point, with correction in prices, the implementation of the Real Estate Act 2016, low interest rates and an overall supportive regulatory environment, all serving to improve consumer sentiment. ´The focus in 2016 was mainly on lowering inventory levels,´ observes Sharad Mittal, Director and Head, Motilal Oswal Real Estate Fund. ´The first nine months saw a ~40 per cent dip in new launches compared to the same period in 2015.´(More from him on page 64.) And Sunil Sharma, Vice President-Marketing & CRM, Mahindra Lifespace Developers, says,´2016 has also been a year of strategic policy initiatives, the broader objective being the creation of a conducive economic system to boost long-term industrial growth and improve ease of business.´ Specific to the sector, The Real Estate (Regulation and Development) Act, 2016 (RERA), seeks to empower all stakeholders engaged in the business and consumption of real-estate. And, the Benami Transactions (Prohibition) Amendment Act, 2016, establishes a regulatory mechanism to strengthen the fight against tax evasion and improve transparency. Sharma adds, ´Yet other announcements, such as the exemption of Dividend Distribution Tax (DDT) for SPVs to REITs and relaxation of FDI norms, were aimed at improving financing to the sector.´ RERA for real RERA came into force on May 1 last year. According to a recent report from PropTiger Datalabs, many states such as Tamil Nadu, Karnataka, Delhi and Maharashtra have finalised the draft rules under the RERA Act; other states will join the league this year. The Central Government has also notified the final rules for five union territories: Andaman and Nicobar Islands, Dadra and Nagar Haveli, Daman and Diu, Lakshadweep and Chandigarh. The market has remained largely unregulated thus far. That said, RERA is largely perceived as a welcome announcement for property buyers as it seeks to promote transparency, accountability and fair play, and bodes well for the sector and stakeholders with corporate governance frameworks in place. To this, Pradeep Aggarwal, Chairman, Signature Global, adds,´In an emerging country like ours, the real-estate sector will need a strong hold on its noose, and RERA is a step toward achieving this. With its absolute implementation, the sector will become more disciplined and organised, reinforcing the credibility of real estate as a whole.´ In Sharma´s view,´While RERA is expected to improve the sector´s credibility score and reinstate a sense of security among commercial and residential end-users, time-bound and transparent approvals can further enable speedy delivery and reduce the cost of real-estate in India.´Pointing to the flip side, CN Raghavendran, Managing Director, CR Narayana Rao (Consultants), says,´Problems faced by developers, including multiplicity of approvals and lack of adequate funding avenues, continue to remain unaddressed in the Act.´However, he adds,´Transparency without guesswork or hidden surprises are a well-deserved protection to these segments to build confidence in the endeavour of moving from woefully deficient housing to an affordable exercise for all.´ Meanwhile, Dr Banashree Banerjee, Urban Planning and Housing Expert based in Delhi, Staff member of Institute for Housing and Urban Development Studies (IHS), Rotterdam; and an independent consultant, says, ´It remains to be seen whether the regulatory function will be accompanied at all by the promotional and advocacy function as envisaged in the Act. It also remains to be seen whether it will aid in the effective delivery of housing and not develop into additional hurdles in the process of housing delivery.´ Hence, while many in the industry are optimistic about RERA, there is a degree of pessimism too. As Gera explains,´RERA is different for different people at the developers´ end.´He lists the reasons that have been driving pessimism: First, the builder has to upload all the information on the website. But many builders are victims of ´political terrorism´, as he calls it, by a local operator. They are blackmailers who tie-up with industry stakeholders, have RTI people in their groups and threaten developers left, right and centre. Second, there are inherent risks of approval, title, labour shortage, material shortage, strike, imperfect quality control, etc, which lead to delay in possession. To date, the consumer has been bearing the risk of the commitment (project completion date) the developer makes. What if the government now says the creditor must bear the risk and not the consumer? Now, the developer is okay with taking the risk, but does the market have the ability to pay for that risk being transferred to them? What impact would this have on cost structure and profitability? Third, one of the financial models in real-estate is the joint development model. So, the builder offers the landowner 20-30 per cent of the profit of the proceeds of the project instead of the land. This serves as a win-win situation for both; the builder pays a small deposit to the landowner, puts his board on the site, and as he starts selling, he pays the landowner and for the approvals. Now, RERA says the developer can only sell, once approvals are in place. In every city in India, approvals cost hundreds of rupees per sq ft. Where is the builder to get the money when banks don´t lend? These are causes of concern for developers. They have to put in 70 per cent of the money that comes in into an escrow account. Nevertheless, Gera is optimistic about the Act as it brings transparency into the system, saying,´This becomes a level-playing field for those of us who have only sold what we have approvals for.´He views this as recognition for developers who have maintained financial discipline over the years and have had an A credit rating. Housing for All In 2016, affordable housing continued to attract significant attention, driven by continued and accelerating urbanisation, rising home ownership aspirations and an urban housing shortage estimated at 18.8 million units as per the White Paper-Indian Housing Industry by research and consultancy firm RNCOS. When Prime Minister Narendra Modi addressed the nation on December 31, 2016, the government´s focus on affordable housing was evident. As Gera points out,´Introducing reduction of interest rates even for Rs 10-15 lakh loan segments, indicates that the government has realised this need for urban housing for the masses.´ The Pradhan Mantri Awas Yojana (PMAY) is a bold and visionary programme.´At a time when unprecedented urbanisation is crippling urban infrastructure, and cities and towns are plunging towards a level of non-performance in ensuring basic quality of urban life, this programme has given a new direction and hope,´affirms Raghavendran. Under the PMAY scheme, 2,508 cities in 26 states have been selected to provide affordable homes to the urban poor. This can accelerate the overall pace of development of affordable housing in India. Meanwhile, Parveen Jain, President, NAREDCO, points out,´There is a requirement of 2 crore homes in urban areas, which is 40 lakh homes per year, and 600 crore homes in rural homes by 2022.´Ruing what he perceives as lack of coordination in the government, he questions:´We are still waiting for single-window clearance to come by. How are homes to be built without approvals?´NAREDCO has written to the Prime Minster requesting consideration of a coordination committee to sanction properties to make the objective of ´Housing for All´ a success. And sharing a progress report dated December 2016, Dr Debolina Kundu, Associate Professor, Editor, Environment and Urbanisation ASIA; National Institute of Urban Affairs (NIUA), says,´Only 6,716 houses have been built across five states. Work is progressing only on 152,686 units (nearly12 per cent of approved projects).´She adds that Gujarat, Andhra Pradesh and Tamil Nadu top the list in terms of construction completed; Gujarat alone accounts for 3,439 units (51 per cent) of the total housing units completed. Also, while Chhattisgarh and West Bengal occupy the fourth and fifth positions, none of the UTs have submitted the proposal. However, a PIB report as recent as last month indicates that PMAY (Urban) housing approvals have crossed the 15 lakh mark with an investment of Rs 82,708 crore. Construction of 78,703 houses for urban poor have been approved last month with an investment of Rs 2,956 crore. What´s more, Tamil Nadu gets 52,336 more houses, West Bengal gets 21,285, and Kerala gets 5,082 houses; Tamil Nadu leads others with total houses approved of 226,572 under PMAY. For her part, Dr Banerjee believes that PMAY has changed the way housing is delivered to the urban poor in a number of ways. She shares the key features as follows:´It takes a citywide perspective and has a two-pronged approach of improving or redeveloping housing in slums and building new houses; it includes peri-urban areas and slums on Central Government land; it decentralises powers of project approval and monitoring; it has created a place for public-sector institutions, users and the private sector to improve the housing stock for the poor. PPP is seen as a significant way forward.´However, she adds that the processes, institutional capacities and working arrangements these innovations require are still not in place, resulting in low performance.´Land-related issues such as non-availability, poor location, unclear titles and informal tenure continue to haunt.´So, in terms of numbers, for Dr Banerjee, the first year-and-a-half of the scheme has not really changed the housing scenario. Hopefully, lessons are being learnt to take the scheme forward. For Sharma, the year 2017 started on a positive note for affordable housing.´Government initiatives will serve to bring home ownership within the reach of a wider cross-section of society via reduced rates of interest and improved affordability,´he says.´This has widened the scope of the CLSS (Credit-Linked Subsidy Scheme), already a part of PMAY, and will make ´Housing for All´ a reality in fast urbanising India.´As for developers, he continues,´The incentive implies additional demand for housing units and reduced unsold inventory. Faster sales off-take can result in shorter revenue cycles and improved project efficiencies; this, in turn, can incentivise more developers to foray into affordable housing.´ Similarly, Aggarwal sees 2017 as the year of affordable housing, especially with the government announcing incentives for prospective buyers and banks reducing lending rates.´We will witness more launches of affordable housing projects than any other segment in the realty sector,´he believes. To this, Manish Agarwal, Partner, Leader-Infrastructure, PricewaterhouseCoopers, adds,´Broadly, while interest in the developer community is picking up in the Rs 15-25 lakh segment, the requirement is much larger in the lower segment of Rs 5-7 lakh. However, I am still not seeing models that excite developers in that segment.´Agarwal suggests,´If the government is able to make this model work along with discounts or subsidies, we will see the problem of urban housing and slums getting addressed in a big way.´ As for Raghavendran, he feels, that while it is too early to judge as the target date for the last phase is 2022 (India´s 75th year of Independence), the programme has laid down a path towards reversing the race to calamity owing to the failure to´decently house the weak´. Ultimately, he views it as a sea-shift in the area of housing, just like other transformational ones in the field of mobile communication; road infrastructure under the Golden Quadrilateral programme; and the recent ´less-cash´ economy drive. Infrastructure boost Real estate has been conventionally looked at as mainly residential, commercial (office and retail) and hospitality. However, newer facets have been gaining momentum, offering opportunities to investors. Along with affordable housing, these include smart cities, infrastructure-linked, real-estate development and industrial corridor-related opportunities. (Read on opportunities along the Delhi Mumbai Industrial Corridor on page 58.) Unplanned, under-invested, ill-coordinated, poorly managed and maintained infrastructure has taken its toll on urban life. As Raghavendran says,´Urban areas are credited as a major contributor to the national GDP. They are the destination of investments and job-creators. However, housing does not exist in isolation and involves the integration of all aspects of employment, mobility, health and education, environment care, basic services and utilities and inclusive social empowerment.´In his view, though, the solution doesn´t just lie in smart cities.´Indian urban areas cannot copy-paste solutions that may have transformed cities elsewhere in the world. We need a bottom-up approach that puts people at the centre.´ Gera sees the biggest impact coming from transport infrastructure, followed by the industrial corridor, as it creates employment opportunities and, therefore, a need for housing. Third on his list is smart cities; with the definition of this programme majorly being for existing cities, he does not see much of an opportunity towards creation of new homes. Banashree, too, believes well-developed transport infrastructure is a major stimulant for housing demand. She gives the example of the new Spine Road in the Pimpri-Chinchwad Municipal Corporation, which connects two major highways and has improved connectivity of various residential, commercial and industrial centres and spurred housing demand and real-estate activity. However, she cautions,´Unless such expansion is properly managed, speculation and haphazard growth can become a challenge.´Blaming lack of opportunity on slow growth of infrastructure development, Jain of NAREDCO says,´Current progress is evident only in highways, railways and power. For the housing sector to benefit from infrastructure growth, other sectors need to progress as well.´ Materials and technologies in demand With increased demand for housing, higher buildings and the risk of cost overruns, faster construction is the need of the hour. In this scenario, aluminium shuttering appears to have become one of the most popular new technologies. Here, Samar Ghoshdastidar, Technical Director, Simplex Infrastructures, adds,´As far as the modular shuttering system is concerned, the construction time of one slab has come down to one week or even lesser from the initial 10 to 14 days. Precast modular shuttering and even tunnel forms are picking up owing to their ability to save time.´He additionally points to precast as one of the latest technologies in housing. ´One can save construction time by 30-40 per cent.´ Gera sees it a tad differently. While some developers are using precast successfully, he believes,´The success of precast depends on the location of the site vis-a-vis the precast factory. If developers create their own mini precast factory on-site, it will certainly speed up construction.´ Adding to the list of technologies, Aggarwal of Signature Global says,´We are enhancing our way of working by using various new technologies such as aluminium foam board technology, where both sides of Kapa mount (lightweight foam board) are covered with bleached lined folding boxboard and aluminium foil. It is therefore water-impermeable and has greater stiffness and stability.´To this, Ghoshdastidar adds,´Construction methodology is becoming mechanised, and even for three-storey buildings today, tower cranes, concrete pumps, etc, are used. The motive is to ultimately save time and improve quality.´As for construction materials, he says, cement, stone chips and sand are in demand. And, in terms of bricks, concrete blocks are being used more. Demand for fast-track and green-building technologies, which also ensure quality and safety, is likely to increase. To this, Dr Banerjee adds,´In any case, the dependence on water and aggregates needs to change for environmental sustainability.´ Emphasising upon the need for quick adoption of radically more efficient, economical, safe and environment-friendly ways of building, Raghavendran says, ´The present ways are wasteful, take too long and are indifferent to environment.´He urges for changes through voluntary initiatives, adding,´Unless regulated and mandated, the push will remain far and distant. More pre-casting and pre-assembled, composites, standardisation and cost-effective, maintenance-free solutions are the way to go.´ 2017: The year for housing As far as housing is concerned, RERA will be the single biggest change this year. Also, much has been spoken on the much awaited reduction in interest rates. And, Prime Minister Narendra Modi´s talk on New Year´s Eve accelerated the reduction in interest rates overnight. As Mittal sees it,´The dual impact of RERA with demonetisation will largely diminish the informal sources of capital that small and fly-by-night developers bank on.´This will bring about a consolidation in the industry where sincere, stronger and larger developers will come out on top. RERA should attract global investors and institutions to further invest in this sector. The overall cost of funds for the developer would also lower with the benefits being passed on to the customer. Combined with the lowering of home loan rates, this would further benefit the industry with increased overall affordability for the customer. While these changes will take time to occur, we believe the beginning of this change shall start from 2017 itself, once RERA is fully implemented. As Agarwal puts it,´With the drop in interest rates, we foresee an uptake in first-level transactions.´ Typically, the housing sector is not quick to change because of the large number of different sectors that come into play: Urban development, infrastructure, industry, land prices, regulations, finance, etc. Having said that, Dr Banerjee adds,´It is interesting to see that housing has got a higher profile in policy and national priority and that different states are coming up with innovative responses to housing demand, especially in the affordable housing segment.´True to that, Rajasthan has made good progress in institution building as well as producing housing in the PPP mode. Maharashtra, Gujarat and the southern states have been frontrunners, but now, Uttar Pradesh, Madhya Pradesh and the north-eastern states are catching up with their own initiatives. (Read article by Brotin Banerjee, Managing Director and CEO, Tata Housing, on the role the private sector can play to make ´affordable´ possible, on page 120.) Further, many reforms and proposals of PMAY are expected to kick-in this year after the initial gestation phase. According to Aggarwal, smart cities and AMRUT are providing further impetus. Positive about the government´s Housing for All mission, he adds,´Several affordable housing projects have already started across the country and many others are in the pipeline as the year proceeds.´Also, the possessions of lakhs of homes are lined up this year. Raghavendran is positive too.´One cannot expect overnight transformation but definitive improvements ought to be recognised, publicised and rewarded,´he avers. Changes in outlook and approach are not expectations from the private sector alone, though. Local bodies and regulatory agencies also have to snap out of their current play-safe inertia and be more open to discussion and exploration. Evidently, hopes are high for housing in the year 2017 û the country is banking on it. It´s now time to deliver. QUICK BYTES RERA: Expected to be the single biggest change in 2017. PMAY: Approvals cross the 15 lakh mark with investment of Rs.82,708 cr. Housing gaining momentum with opportunities along affordable homes, industrial corridor-realted, and infrastructure-linked, real-estate development.  ´NHB´s focus areas include affordable housing and green housing.´ - Sriram Kalyanaraman, Managing Director and CEO, National Housing Bank The housing finance market has been growing well in recent years with a CAGR of about 19 per cent. Affordable housing is considered the main growth driver of this, especially homes up to Rs 30 lakh. Sriram Kalyanaraman, Managing Director and CEO, National Housing Bank (NHB), says,´As per the trend available with us, about one-third of housing units financed by public-sector banks and housing finance companies were in the below-10-lakh loan segment.´This momentum is expected to continue with the Government of India´s ´Housing for All by 2022´ mission. Kalyanaraman shares more on the present funding scenario with SHRIYAL SETHUMADHAVAN. Offerings to the real-estate segment: NHB´s focus areas include affordable housing and green housing and providing refinance to primary lending institutions such as banks and HFCs. To promote the market holistically, NHB also provides different funds like rural and urban housing funds, and has arrangements with multilateral institutions for low-cost funds. The timeframe for implementation of housing projects has been reduced considerably compared to the past. Some states like Madhya Pradesh, Gujarat and Rajasthan have already fast-tracked their approval process, while others are moving towards the same. Expediting the process through single-window clearance system would help increase supply as builders can start construction in six to eight months of land acquisition, which would also result in a drop in prices. NHB is also requesting the Centre and state governments to rationalise stamp duty and registration charges, and make them online processes. The effective stamp duty for the end-customer, at present, varies between 6 per cent and 12 per cent (stamp duty + registration charges + conveyance + deemed mortgage on deposit of title deeds). We believe a uniform, low-level duty on registration, at least on affordable houses, would give a further boost to the industry. NHB, in association with IIM-Bangalore, is undertaking a study on the impact of reduction in stamp duty and registration charges. All these initiatives are expected to provide a fillip to the affordable housing market through implementation of streamlined and rationalised processes. When implemented fully, RERA will also bring in much more transparency for the consumer. Securing funds for acquiring land: As of now, banks and housing finance companies are not permitted to lend to private developers for acquisition of land on standalone basis. Developers can explore the possibility of alternative investment funds for acquisition of land. Public agencies, however, can access bank funds for land acquisition, provided it is a part of the complete project, including the attendant infrastructure. Government announcements and reforms building on the confidence of financiers: The Housing for All by 2022 mission has provided a renewed thrust to the housing market, especially in the below-Rs-25-lakh segment. RBI´s classification of up to Rs 28 lakh in metro cities and up to Rs 20 lakh in other centres as priority sector advances and the Union Budget announcement for tax concession have provided an added fillip to this segment. The government´s Smart Cities programme is expected to strengthen infrastructure, thereby giving a further boost to the housing sector. With the RERA provisions being implemented by various state governments, a new, customer-centric, transparent, stable and viable housing and housing finance ecosystem is evolving. NHB has also been constantly streamlining and optimising its resources to serve the needs of the market more efficiently, in tandem with renewed thrust of the governments. Under the Housing for All Credit Linked Subsidy Scheme, there is a 6.5 per cent interest subsidy available to the EWS/LIG category. This, combined with the tax incentives announced by the government for affordable housing in the last Budget, would give a further boost to affordable housing. The new scheme announced by the Prime Minister on December 31, for the MIG segment is further expected to give a big impetus to the housing sector, both on the supply and finance sides. Growth of housing sector: The housing finance market in the past three decades has expanded and graduated to a relatively matured one with integration to the larger financial market. New institutions, products and an expanding customer base, have ensured that the sector maintains its growth, even in difficult market conditions. Owing to stiff market competition, banks and housing finance companies are evolving and offering new products to improve affordability and increase the customer base. Many affordable housing projects announced by public agencies and private developers will invoke higher interest for affordable housing by the consumers, in line with the government´s thrust. Factors to be addressed to meet the affordability goal Speaking on how the government´s Housing for All initiative has changed the housing scenario in India, CN Raghavendran, Managing Director, CR Narayana Rao (Consultants), shares his views.´While the published data available so far suggests that the programme is taking root well across the country, my guess is that there could be a curtailed success at the end of the targeted date, if a few of the associated factors that impact the goals are also tied together and coordinated.´He elaborates: ò Enhancing the ready availability of land bank. In urban areas, land prices fall under heavy speculation and unclear legal, political interference and opaque transactions. The targeted group for the PMAY is wholly ill-equipped other than having the sale price unduly hiked up owing to high land cost, except when such development happens beyond urban boundaries; this has its own maladies in terms of infrastructural hardships. Lack of efficient and economical urban public transport and connectivity to utilities become hindrances that thwart planned growth. Budget outlay needs to be vastly enhanced, given the hugeness of numbers targeted. Housing for All in urban areas is a herculean task to begin with. The urbanised cities and townships are growing at such a pace that the budget allocation shall also be strong from the start and be enhanced in the short time left, should the scheme not run out of fuel. Technology shall become more innovative and implementable for efficient execution and achieve a reasonable robustness and durability, yet remain affordable. The current practices, including skill sets, are certainly falling well short of expectations. A parallel upgrade of supportive infrastructure is an essential need to reach comprehensive development that can sow the seeds of radical improvement in the urban, social and economic fabric in India in the coming decades. Last, but not least, this is a massive initiative that will use up resources of all kinds in its entire life-cycle, efforts to design, build and put to use the housing. As it is, the consequences of unplanned growth of urban areas and the impact of climate change, whether acknowledged or otherwise, are making cities and towns unliveable year-on-year. Therefore, it is imperative to mandate that all new housing must respect the environment and ecology and the entire process must adopt green housing principles as they are achievable without extra financial burden. ´DMIC cities are going to redefine housing infrastructure in India.´ - ALKESH SHARMA, CEO & Managing Director, Delhi Mumbai Industrial Corridor Development Corporation (DMICDC), highlights opportunities for housing arising from the development of industrial corridors. Urbanisation is an inexorable process as far as India is concerned. Future growth lies in cities and a large chunk of our GDP will come from urban centres. Our existing cities were never planned to deal with the exponential levels of population growth they are currently seeing. We see their struggles everyday as civic resources are stretched to the limits. Housing infrastructure is a casualty in unplanned urban growth and, as a consequence, so is the quality of life of people. Industrial corridor projects address this need by envisaging planned, future-ready cities. All industrial nodes being built as part of these projects are coming up as smart cities that offer not just state-of-the-art industrial infrastructure but world-class living spaces. As far as housing infrastructure is concerned, building entire greenfield cities up from scratch offers vast advantages over the redevelopment of existing urban spaces, especially densely populated zones. Well-laid utilities, high-capacity transportation, green, open spaces, ICT linkages for city administration and management and e-governance for citizen services are built-in right at the planning stage in each of the cities. Housing infrastructure will naturally be tailored to the requirements of each industrial zone, its geography, and the needs of prospective residents. In the Delhi-Mumbai Industrial Corridor (DMIC), we have planned eight smart cities in Phase-I. Four of them - Dholera in Gujarat, AURIC in Maharashtra, Vikram-Udyogpuri in Madhya Pradesh and Integrated Industrial Township Greater Noida Ltd (IITGNL) in Uttar Pradesh - are in the implementation stages, with laying of roads and utilities in progress. Dholera, with a total footprint of over 920 sq km and developable area of 540 sq km, is among India´s largest upcoming green cities with a target residential population of 2 million and employment for 800,000 people by 2040. Phase-I of the project covers an activation area of 22.5 sq km. It is the first city where all utilities are being laid underground with the capability of handling the future demands of the city. Its overall plan has already received the Green City Platinum rating from the Indian Green Building Council. In contrast to Dholera, which has large land parcels, IITGNL is relatively small, covering about 302.63 hectare. It targets direct employment of around 58,000 and has earmarked 10 per cent of the project for residential and around 15 per cent for open spaces. Owing to land limitations, it is targeting a more vertical growth and its housing infrastructure will be in accordance with those requirements. And, like other DMIC smart cities, IITGNL too will have state-of-the-art residential and infrastructure amenities. Residential space is provided in the form of group housing targeting HIG, MIG and LIG. EWS housing is also catered for. Worker housing and housing for daily service providers is an integral part of city development in all industrial corridors. Housing and civic infrastructure is similarly benchmarked to the highest standards in AURIC and Vikram Udyogpuri and other cities in various stages of planning. DMIC smart cities will redefine both industrial and housing infrastructure in India. They will serve as models of long-term planning for housing and other infrastructure. The corridors, while creating fully built-up cities and manufacturing zones, also intend to serve as catalysts and blueprints for the development of surrounding areas. ´We are looking to disburse Rs800-1,000 crore in 2017.´ - Sharad Mittal, Director and Head, Motilal Oswal Real Estate Fund Demonetisation has left banks flush with cash. The same can be witnessed in the interest rate cuts offered by them.´So, yields will come down in future with banks directing their capital towards this sector,´says Sharad Mittal, Director and Head, Motilal Oswal Real Estate. However, this would be applicable only to projects that have already been kick-started or received all approvals.´Early-stage funding (where we are involved) would still be costly and difficult to obtain,´he says. Speaking from his experience of spearheading the real-estate fund business of the private equity arm of Motilal Oswal Group, Mittal shares more with SHRIYAL SETHUMADHAVAN. Amount to be disbursed: We are actively pursuing deals in the market and our focus is on the top seven cities in India. Our strategy for 2017 would be doing mezzanine or structured equity deals with well-established developers. Our key focus segment would be the affordable and mid-income housing segment. We expect demand to revive in this segment in the next 12 months as it is largely dominated by end-users from the salaried class and are dependent on home loans. Based on these focus areas and our strategy, we are looking to disburse ~Rs 800-1,000 crore across our funds in 2017. Securing funds for acquiring land: In 2006, the regulators prohibited banks and housing finance companies from funding land transactions, fearing asset price bubbles owing to increased speculation. So, apart from informal sources of capital, developers rely on private equity funds and NBFCs for acquiring land. We, as a private equity real-estate fund, come in at an early stage and, depending on the type of project we are funding, we offer flexibility in payment structures for the developer. We undertake investments with different structures like lower coupon rates, back-ended payments, payable-when-able structures, etc, depending on the type of developer and the stage we come in at. The increased flexibility allows the developer to manage the project cash flows prudently. - SHRIYAL SETHUMADHAVAN To share your views on India's housing segment, write in at feedback@ConstructionWorld.in