It is estimated that the long-term debt requirement in the residential market itself will amount to nearly INR 430,000 crore till 2026. Furthermore, India’s real estate construction market, comprising other asset classes like Grade A commercial offices, high-quality malls, warehousing parks, and data centres, is collectively predicted to experience a 35-40% growth trajectory over the same period. This equates to an overall estimated potential of INR 550,000 – 600,000 crore.

Construction finance in India is dominated by the residential sector, accounting for approximately 70% of the market. However, there is still a significant gap between the total residential construction debt requirement and the debt that has been sanctioned, indicating the underserved potential of the market. Given strong fundamentals and a significant need for long-term debt in construction finance, the current gap between sanctioned and market debt stands at ~INR 150,000 crore.

Additionally, the LRD market in the commercial segment is expected to exceed a value of INR 800,000 crore by 2026. With strong demand fundamentals and sustainability measures in place, the LRD potential in the commercial office segment alone is expected to grow by 30% in the next three years. Furthermore, the physical retail market and other rent-yielding assets such as warehousing, data centres, and hotels present substantial opportunities for lenders in the Lease Rent Discounting (LRD) segment.

“In India’s thriving real estate sector, lenders have a golden opportunity to capitalize on the momentum. Recent transformations, like RERA, GST, and REITs, have opened doors for increased lender participation. Last year, Public and Private sector banks accounted for 68% of total debt sanctioned, highlighting growing confidence and interest. The popularity of Lease Rent Discounting (LRD) in commercial real estate has also grown, constituting an average of 19% of total debt sanctions, with a notable increase to 25% in 2023. While dominant lenders in the market pose challenges for smaller developers in accessing credit, it also presents an opportunity for new lenders to enter the market and cater to the financing needs of aspiring developers. To support developers at different stages, innovative and customized funding structures are needed, offering a lot of opportunity for AIF. Private credit will continue to play a crucial role, particularly in the residential sector. Shifting focus to smaller developers who make up over 2/3rds of the residential market can make funding more inclusive, ” said Lata Pillai, Senior Managing Director, Capital Markets, India, JLL

The report underscores India’s real estate sector as a pivotal contributor to the country’s GDP growth, predicting significant potential for lenders in this burgeoning market. 

Banks make a strong comeback in India’s RE debt market

Upon analysing the sanctioned debt numbers across the top seven cities, Mumbai, NCR, and Bangalore accounted for 80% of the total debt sanctioned in the last six years, demonstrating their importance in the real estate market. However, challenges such as the IL&FS and NBFC crisis in 2018 and the impact of the pandemic in 2020 caused a slowdown in the debt market. But the resurgence of the real estate markets from 2021 onwards has created new opportunities for lenders and borrowers alike.

The study showed that the banking sector’s participation has increased, accounting for 70% of the total debt sanctioned in 2023, compared to non-banking sectors. Reforms in the real estate sector, such as the Insolvency and Bankruptcy Code (IBC), have instilled confidence among both public and private sector banks.

The dominance of a few large players in debt financing poses challenges for aspiring developers. However, the demand for quality real estate assets and the sector’s projected growth present opportunities for expansion and new players. Private credit providers, such as Alternative Investment Funds (AIFs), can play a crucial role in filling the financing gap and providing tailored solutions to borrowers.

“The real estate sector has witnessed significant growth and transformation from pre-Covid to post-Covid era. As the sector grows from 7.23% of the nation’s GDP to a projected contribution of around 14% by 2030, the sector presents a lucrative opportunity for lenders in the market. Diverse funding sources, including traditional loans, private equity and venture capital, offer flexibility to borrowers in exploring different financing options”, said Raja Seetharaman, Co-founder & Director of Propstack. 

Overall, the Indian real estate market offers tremendous opportunities for lenders, investors, and borrowers. With the sector’s rapid growth and the availability of diverse financing options, it is crucial for stakeholders to leverage these opportunities and drive economic development through strategic debt financing.

Also Read: Good News: Unchanged Repo Rate, no Change in Home Loan interest

The post ₹10 lakh crore debt sanctioned for real estate from 2018-23 appeared first on Square Feat India.

 Survey to begin from Kamla Raman Nagar
 Govt. of Maharashtra to decide on eligibility of informal tenement residents
 Data will be captured via indigenously developed app
 Every informal tenement will be given a unique number
 Toll-free number 1800-268-8888 set up to share information

Dharavi Redevelopment Project Pvt Ltd (DRPPL), a joint venture between the Government of Maharashtra and the Adani Group, today announced that it will begin the survey to collect data from lakhs of informal tenement residents of Dharavi on 18th March, 2024. The data will be used by the state government to determine their rehabilitation eligibility criteria under the proposed redevelopment project.

The survey will also create, for first time ever, a ‘Digital Dharavi,’ an advanced library of one of the world’s largest informal settlements.

“The survey for Dharavi Redevelopment Project (DRP) and Government of Maharashtra
kickstarts one of the largest urban rejuvenation projects in the world and is the first step
to make Mumbai slum free. It is the beginning of transforming Dharavi into a worldclass
township, a state-of-the-art city within Mumbai. We urge all Dharavikars to support this
exercise, which will enable us to execute the rehabilitation process and ultimately provide
them with their dream home,” said a DRPPL spokesperson.

The survey will begin from Kamla Raman Nagar, with a unique number being given to each
informal tenement. This will be followed by laser mapping of the respective lane, known
as ‘Lidar Survey.’ A trained team will visit every tenement with an indigenously developed
application to scan documents. A toll-free number- 1800-268-8888 has been activated to respond to the queries and concerns of Dharavikars.

For decades, Dharavikars have been waiting for redevelopment to move into their dream
homes and commercial establishments. Now, the process to transform Dharavi into a
world-class township is going to begin and reshape the destiny of lakhs of residents.
The unique feature of the DRP scheme of the Government of Maharashtra is that each
and every informal tenement holder will get a home. For the very first time in such a
project, homes will be provided to qualified ineligible tenement holders too. Recently,
DRPPL announced that as per the DRP tender, all eligible and ineligible resident tenement
holders will get a flat with an independent kitchen and toilet.

Also, eligible industrial and commercial units in redeveloped Dharavi will enjoy a five-year
holiday in State Goods and Services Tax (SGST) payment to boost and help formalise their
businesses; this is also as per the tender conditions.

Dharavi encompasses several thousand industrial and commercial units manufacturing
garments and leather items. Many are vendors for large national and international
brands sold across the world, with turnover estimated to be in millions of dollars. They are
keen to formalise their businesses to expand and get a fillip, both locally and globally.
DRPPL has engaged world-renowned city and infrastructure planning experts – U.S.-
based design firm Sasaki and U.K.-based town planners Buro Happold – to design a world class city.

Also Read: Dharavikars to get highest carpet area than any
SRA project in Mumbai

The post Survey of Dharavi to commence on 18th March appeared first on Square Feat India.