In a move to help the cash-strapped builders and developers by attracting investments into affordable housing and smart cities, the Cabinet on Wednesday approved relaxation in construction foreign direct investment (FDI) norms .
Minimum capital requirement for project pinned with norms for minimum built-up area and capitalisation have been liberalised, suggest sources.
Suresh Kris, CFO, Brigade Enterprise sees relaxed norms for 100 percent FDI in construction as a shot in the arm for the sector with an anticipated increase in demand for land.
On the flipside, YD Murthy, Executive VP-Finance at NCC says the FDI notification does not pertains to real estate developers and not engineering, procurement and construction (EPC) companies but they will bid for EPC projects if NHAI bidding comes up, he says in an interview to CNBC-TV18.
Recently, NCC's rights issue were oversubscribed, of which most proceeds will be used to reduce short-term loans and NCDs, says Murthy adding that company's debt-equity ratio will change favourably post rights issue, increasing its net worth to over Rs 3,000 crore.
Below is the verbatim transcript of YD Murthy and Suresh Kris' interview:
Q: The overnight announcement that you can get FDI for affordable housing especially even for smaller or cheaper units, does that materially change the game for you?
Kris: FDI investment into affordable housing has been in talk for a while. Apart from other points like reduction in the minimum area from 50,000 sq m to 20,000 sq m and cap rate from USD 10 million to USD 5 million. But still, the area is only 60 sq m of area and out of it again 21 to 27 sq m should be the carpet area and 35 percent of the units has to be committed to this and 30 percent of the total cost should be committed to the affordable housing. 60 percent of the floor space index (FSI) area to be committed to affordable housing.
These criteria are there but one big positive is that there is no minimum capitalisation or there is no minimum area definition into this. Maybe, for Brigade or for any other developers who are having small land parcels which would not have been qualified for FDI earlier may qualify for this now.
Q: But are they waiting for to come, FDI that is?
Kris: FDI may come into this, which is what I am saying because again some of the FDI companies those who don't want to invest so much India on to a specific project of those sizes, it is easy for them to come in.
Q: Do you have any affordable housing projects. Are you planning to get into this segment in a big way and have you seen any interest from foreign players?
Kris: We already have one sovereign fund for our projects and we already have entered into MoU with GIC Singapore earlier. So that is already there but presently we do not have any affordable housing as such but again going forward depending on the market absorption demand and our involvement into developing those segments definitely will clarify more.
Q: Your take, will you need FDI in any of your EPC projects, do you see interest, is yesterday's announcement making things easier for you?
Murthy: The government notification pertains to real estate developers and not for construction and EPC companies and as such, we are not in need of any foreign investment in contracting business that is our bread and butter business. We already have various international investors on the equity side in our company. So they are already there supporting the management and company.
Q: Some EPC guys notably L&T, have got into housing construction in some ways. Are you not planning to do that?
Murthy: We have a subsidiary called NCC Urban that is focused on real estate development, predominantly residential development. So that could be beneficial to NCC Urban. We will have to examine how the notification is.
Q: A couple of players told us just a while back that among listed developers, many are not looking at private equity investors right now because at least the ones who are getting money, most of them get cheap money. So the cost of borrowing is between about 12 to 15 odd percent while the returns that PE investors would expect would be much higher. So what is the appetite like from the listed players' point of view or from the developers' point of view?
Kris: From developers' point of view we could say that even though the borrowing cost maybe from 11 to 14 percent the cost of equity maybe much higher. There is no doubt about it. Whether it is structured dealings or even pure equity dealing and affordable housing will give that much return or not I do not know, but those who are having smaller land parcels can go into that and who are not able to borrow money at these levels but only the way out is only that FDI kind of thing these kind of FDI are into affordable, number one.
Secondly, the big question which I have apart from the affordable housing which you can also throw some light which is a significant change from the earlier one is that 50 percent of the development has to be done in five years or something from the approval date which has been dispensed with now. So there are a lot of projects by other developers. It is not applicable to Brigade, whereas some projects or some companies where the projects have been abandoned for a long time and that three-year minimum lock in period may not be relevant for them because 50 percent of the area has been developed, but that condition has been taken out now. So it is only three years lock in period which is a significant move for real estate companies where they are already stuck up with large projects like that.
That is a significant move rather than affordable housing because affordable housing like low interest rate and some benefits all those things are there in play for some time but it has not attracted so much. By lowering the project size I don't think so much of appetite will happen immediately in affordable housing.
Anda sedang membaca artikel tentang
See land demand rise amid liberalised FDI norms: Brigade
Dengan url
https://kesehatanda.blogspot.com/2014/10/see-land-demand-rise-amid-liberalised.html
Anda boleh menyebar luaskannya atau mengcopy paste-nya
See land demand rise amid liberalised FDI norms: Brigade
namun jangan lupa untuk meletakkan link
See land demand rise amid liberalised FDI norms: Brigade
sebagai sumbernya
0 komentar:
Posting Komentar