Last-mile funding for stuck home projects a big draw for investors
In a sharp contrast to previous years, more investors are showing keen interest in last-mile funding for stuck housing projects that seems to be a rub-off effect of the government earmarking Rs 25,000 crore for similarly stressed residential projects. In the backdrop of changing regulatory and business environment, the pressure is mounting on developers to deliver the projects as early as possible in line with the earlier promised possession schedule. According to government estimates, 4.58 lakh housing units are facing delayed delivery across 1,600 stuck projects. The delay has resulted in rising consumer activism, a number of litigations in consumer forums and even the National Company Law Tribunal (NCLT). Kotak Investment Advisors, the alternate investment business of Kotak Mahindra Group, has set its sights on distressed projects in the liquidity-hit real estate sector and is looking to acquire such projects across the country. Kotak, one of India’s largest domestic real estate funds, raised total funds worth $1.8 billion so far and has dry powder of around $500 million, or Rs 3,500 crore. After making two key investments in stuck projects over the past two years and making around 23% returns by turning them around, the fund has taken a call to focus on pursuing opportunities in this space.
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