‘GST is no longer a dampener for the housing sector’

The Budget proposals are a clear positive for the housing sector, especially the affordable home category. I see this as a solid growth segment, and is currently witnessing over-heated demand. Because of the subsidy and organised construction, we are seeing good pick-up in this segment, and the demand is high. We expect this positive trend to continue in the foreseeable future. About 42 per cent of our book would qualify for affordable housing criteria.

Teething initial issues related to GST are behind the sector. It is no longer a dampener. The rate has come down to a level (5 per cent) that has made it affordable to buy.

While so much has been written on the issues related to liquidity, the problem in the home finance sector as well as in the NBFC space has been restricted to a few individual companies, and it was not a sector-wide issue. Liquidity was not a problem for Sundaram Home Finance, even when the issue was at its peak in Q3 last year. Having said that, the cost of funds did go up after September 2018, but this has come down over the months. Overall, the increase (in cost of funds) has been marginal.

Of course, one of the key issues that the home finance sector has grappled with for a long time is the lack of long-term debt instruments.

There is an asset-liability mismatch in this sector. It is important to bridge the gap between the period of the assets (which is usually 15-20 years for housing finance companies) and the funding available (five to seven years). We get long-term debt from NHB.

We are looking to raise ₹3,600 crore this year through a mix of debentures, term-loans from banks, funding from NHB, and public deposits. We have about ₹1,300 crore of public deposits.

Certainly. It is becoming far more organised than it was earlier. It is no longer a small builders’ game. The launch of RERA (Real Estate (Regulation and Development) Act) has been a real positive move for the sector, with buyers getting solid protection from violations and delays by builders, though the government has to strengthen the hands of the authority in administrative terms to handle complaints.

The ratio between EMI and rent has widened a bit in recent years as rentals have not increased in a big way. I feel the rental housing concept could pick up in the country. The Tenancy Act may have to be modified a bit for the concept to catch up faster.

When it comes to Chennai, increased FSI will drive redevelopment of old flats, and this will pull people from outlying areas to key locations within the city.

We have a two-fold growth plan. On the one hand, we will look to fill uncovered areas in the southern markets, while on the other, we will tread cautiously into newer markets. Eastern and western India, where we made forays over the last few years, have been doing well. We would like to have steady growth in these markets.

In the southern States, there are a number of Tier 2 locations to explore. In Kerala, we are currently present in 21 locations, and have been doing fairly well, especially in the North Kerala belt. We will look to expand in South Kerala, as it holds a lot of potential in the long term. We are also witnessing good growth in Karnataka. We are seeing a clear revival in Hyderabad and Telangana.

Tamil Nadu is a very important market for us, and we will continue to expand our presence in the State. About 18 per cent of our business is from the Chennai market.

In terms of growth in disbursements, we are targeting 10 per cent this year. We are consciously slowing down on growth in the non-housing segment (loan againt property/mortgage loans) and are focussing on the home segment.

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