Only legitimate developers can afford funding in future

Venue—Hotel Kohinoor Continental

Moderator—Pranay Vakil, Chairman, Knight Frank India

Panelists—Kruti Jain, Director, Kumar Urban Developers

Sunil Dahiya, MD, Vigneshwara Developers

Atul Modak, Head, Kohinoor City

Ravi Sinha, CEO & Managing Editor, Track2Realty

Ravi Sinha: To sum up the discussion, what kind of funding do you see emerging in the coming year?

Pranay Vakil: I would like to thank all of you. I think it was a very thought provoking discussion. I am not necessarily saying we have all agreed, but in most cases our thinking has been on the same wavelength. Having said this, yes we have a real problem of funding the developers and we have a real problem of funding the buyer. The buyer because, he may want to buy something which is yet to get approvals, because he has an interest rate which is ever changing. From the developer’s perspective, not every developer has this luxury of tying up with a JV partner because a JV partner, the land owner is looking for a brand. The brand can happen only if you have so many years behind you. If you cannot get a partner, you can still find the funds. So how are you going to do that? Let us go one by one, may or may not be the right answer.

Time wise, we may be at the worst time trying to raise money as a real estate company. As far as influencing the RBI, this is something which we can look towards for the right kind of developers, for people who want to use and not misuse the funds. As you said, I am sure you can not paint everyone with the same brush.

Raising money from banks for land buying is almost impossible unless it is an SEZ or something where the development has to be completed in a very finite time period. Some of that funding is possible but not for the agricultural land even if it is going to get automatically converted under the town planning acts.

I think, if the IPO is difficult, banking is difficult, venture capital turns into vulture capital, there are not many options left. The options are to go to a real estate fund or a PE fund, discounting of receivables is an option but these are short term fixes. For a medium to long term fix, we will have to bring pressure on the government to permit REIT, to let the pension funds in, by legitimate developers doing legitimate developments and I think the need of the industry will be met.