Lack of Credit Is Choking Realtors, Growth: Hiranandani
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12/10/2018 www.newindianexpress.com/business/2018/dec/09/lack-of-credit-is-choking-realtors-growth-hiranandani-1908996.html# Home Business Lack of credit is choking realtors, growth: Hiranandani This writer first ran into Hiranandani two decades ago, when builders in Mumbai, facing extortion gangs, had all gone underground. Published: 09th December 2018 02:04 AM | Last Updated: 09th December 2018 02:04 AM | A+ A A- Niranjan Hiranandani, co-founder and MD of the Hiranandani Group | Express By Gurbir Singh Express News Service Niranjan Hiranandani, who first introduced Mumbai to luxury apartments and grand lifestyle buildings with chandeliered 50-feet high lobbies, has just been declared India’s 6th wealthiest builder by the Grohe Hurun Report. He has personal assets worth Rs 7,880 crore. The endorsement hasn’t cramped his affable style, and he continues to do what he likes best—represent the industry. Becoming President of the realtor association, National Real Estate Development Council (NAREDCO), last September, has made that task easier. http://www.newindianexpress.com/business/2018/dec/09/lack-of-credit-is-choking-realtors-growth-hiranandani-1908996.html# 1/3 12/10/2018 www.newindianexpress.com/business/2018/dec/09/lack-of-credit-is-choking-realtors-growth-hiranandani-1908996.html# This writer first ran into Hiranandani two decades ago, when builders in Mumbai, facing extortion gangs, had all gone underground. Nobody spoke to the media. Niranjan Hiranandani, a prominent face then too, was also among those who had a posse of police guarding their every movement. Yet he never baulked from returning calls to comment on housing and construction. For harried Mumbaikars facing pot-holed roads and crumbling infrastructure, Hiranandani thinks ‘ache din’ is still very much on the agenda. “There is 210 kilometres of Metro Rail on track; the cross-harbour sea link has finally started; an alternative airport at Navi Mumbai is finally on, and Chief Minister Devendra Fadnavis is running a war room to ensure all this becomes reality,” Hiranandani says. On the national level too, Hiranandani believes the Modi government is on track for its Housing-for-All-by-2022 programme; and thinks the new, scaled-down housing shortage number of 12 million units can be met. “The government sanctions for homes and subvention of `1.5 lakh crore are in place, urban development minister Hardeep Puri has assured me,” he says. Facts, however, run contrary to his optimism. The latest CRISIL Report figures say the Central government has, in the last 3-4 years, sanctioned 6.7 million homes but has been able to complete only 1.2 million units so far. Hiranandani also conceded that the ‘Smart Cities’ slogan was an overkill, creating aspirations that could not be met. “The concept of creating smart cities is a bit of an overstatement; we should limit ourselves to creating the first step of good infrastructure in cities,” he explained. What does he feel about the consumer perception of the industry? Droves of Delhi builders—the promoters of Amrapali, 3C and Unitech, among others—have been arrested for failing to deliver. Isn’t the housing market taking a hit because of their illegal activities? Noida is the big problem, he concedes. “There are 2.5 lakh units up without takers; 90 per cent of the money is collected and there is no delivery; and 40 per cent has been spent. Builders have not paid for the land to the UP government. Two-thirds of those stuck are investors. It is for Noida that RERA was brought in; and RERA doesn’t work there. There seems to be no solution.” http://www.newindianexpress.com/business/2018/dec/09/lack-of-credit-is-choking-realtors-growth-hiranandani-1908996.html# 2/3 12/10/2018 www.newindianexpress.com/business/2018/dec/09/lack-of-credit-is-choking-realtors-growth-hiranandani-1908996.html# The NAREDCO president, however, feels that there are other reasons than a few fly-by-night builders that are dealing body blows to the housing industry. The GST regime, for instance. “GST has changed everything. There is no market for under- construction flats as there is 12 per cent GST. Once completed, there is no GST.” But surveys on unsold stock are misleading and overstated. “Once occupation certificate (OC) is given, these properties sell,” Hiranandani says, adding: “It is not as bad as it seems. I have sold more commercial stock in the last three years than I have in the previous 14.”But behind all his brave postures, one can see the realtor is worried. He concedes there is a slowdown and blames financial and banking policies that are restricting growth of credit in the system. “There were serious speed bumps we faced in 2017—demonetisation, RERA and GST. We were just coming out of the crisis, and then IL&FS happened.” Credit is what drives growth. But with the IL&FS crisis, funding to the non-banking finance companies (NBFCs) was choked. Builders, whose funds are escrowed for each of their projects, draw money from NBFCs, and that line being cut off has meant all-round slowdown. “RBI has to find a solution. At this rate, affordable housing targets too will just remain on paper,” he warns. But Hiranandani is the eternal optimist. He says the industry is finding a way out through consolidation. Builders in trouble are allying or selling out to those who have deeper pockets. DLF is back in business by selling its non-core assets. A builder in the eastern Mumbai suburbs has just given over three projects to competitors to complete. “Growth has always been, and will be cyclical,” he concludes. Ads by Kiosked Stay up to date on all the latest Business news with The New Indian Express App. Download now (Get the news that matters from New Indian Express on WhatsApp. Click this link and hit 'Click to Subscribe'. Follow the instructions after that.) TAGS real estate hiranandani GST http://www.newindianexpress.com/business/2018/dec/09/lack-of-credit-is-choking-realtors-growth-hiranandani-1908996.html# 3/3.