Govt-backed stress fund starts realty projects revival, homebuyers gain confidence

MUMBAI: The Special Window for Completion of Construction of Affordable and Mid-Income Housing Projects (SWAMIH I) supported housing projects have started witnessing fresh sales and collection of dues from existing homebuyers, a signal that indicates a change in confidence levels of prospective and existing homeowners towards stressed projects.
The renewed interest has sent a wave of relief for 87,000 homebuyers in these projects that were staring at uncertainty and delay due to lack of funding.

With this, the fund has already started delivering the objective it was set for exactly a year ago.

The last-mile funding being made available to these projects has instilled confidence among homebuyers.

The SBICAP Ventures managed fund has cleared investments worth over Rs 13,200 crore for 136 projects and has started deploying funds across 36 projects.

Most of these 36 projects have started receiving instalments from existing homebuyers and registering new sales too.

“In every investment, the fund has been advising developers to inform all home buyers that the SWAMIH fund is stepping in to complete the project. This has dramatically increased the sentiments regarding the project. Developers are reporting renewed interest in enquiries in the project with the fund’s entry. Even stressed projects are beginning to immediately see the green shoots of recovery as new home sales have returned in these projects,” said Irfan A. Kazi, Chief Investment Officer, SWAMIH Investment Fund I.

Homebuyers who have been dealing with the uncertainty over completion and handing over of their apartments in these projects are now optimistic about the delivery and adherence to timeline hereafter.

“Availability of funds has made a difference and the deal was structured in such a way to ensure faster completion of the project. Robust control mechanism by the SWAMIH fund has provided homebuyers confidence that the funds will not be siphoned off and will go only towards completion of the project. We are witnessing new sales and value appreciation taking place in our project,” said Saurabh Mehrotra, one of the 700 homebuyers at CCI Rivali Park project in Mumbai’s Borivali suburb.

This was one of the first projects to have received last-mile financing support from SWAMIH Fund I. The project is nearing completion now and is expected to get occupation certificate in the next two months.

“The entry of the SWAMIH fund has not only given us hope, but assurance and confidence of the project’s delivery. We have started paying up past dues as the project has started making visible progress even in the recent months of partial lockdowns,” said Santosh Patil, one of the 1,800 homebuyers at Mantri Serenity on Kanakapura Road in Bengaluru.

“In terms of the traditional capital asset pricing model, it's almost like the project has an additional alpha of return due to SWAMIH in addition to the beta from the market,” Kazi said while referring to new sales at these projects.

SWAMIH is a category II Alternative Investment Fund (AIF) that was announced by Finance Minister Nirmala Sitharaman in September 2019 and was approved by the Cabinet in November 2019.

According to government estimates, there are 4.58 lakh stalled housing units in 1,509 residential projects stuck across the country.

The Rs 12,500-crore fund, with green-shoe option of additional Rs 12,500 crore, aims to provide financing to enable completion of stalled housing projects and ensure delivery of apartments to troubled homebuyers.

The projects that have been approved for financial support are spread across a mix of markets including the Mumbai Metropolitan Region (MMR), National Capital Region (NCR), Bengaluru, Chennai, Pune and also tier-II locations including Nagpur, Jaipur, Nashik, Vizag and Chandigarh among others.

Once the first tranche of the fund gets deployed completely, SWAMIH will exercise the green-shoe option for additional funds and that call is likely to be taken then.