FIIs & PEs to partner govt in SPV for affordable houses

NEW DELHI: The government is planning to float a special purpose vehicle (SPV), National Shelter Fund, in association with foreign institutional investors (FII) and private equity funds to provide affordable houses in the country.

The government would raise its contribution for the fund through a proposed 1% cess on stamp duty collections, levied by states. The creation of SPV is likely to be announced in the forthcoming Budget.

The proposed SPV will be on the lines of Isthithmar of Dubai and Temasek of Singapore, but unlike these funds, the fund would only be used for domestic purposes. ���As far as the willingness of the state governments is concerned on parting with their revenues, they would also be incentivised by growth of housing accommodation in their states,��� a senior government official said.

Of late, state revenues on account of stamp duties have been on the rise. After having been continuously prompted by the Centre, many states have reduced the levy from as high as 14% to 5%, which has shown a marked growth in their revenue.
This would infuse a fresh leash of life into the country���s crumbling housing sector. The fund, with an initial corpus of Rs 1,000 crore, would be invested in middle income group (MIG) housing across the nation.

���The idea is to develop housing on private partnership basis. The way forward is to offer stakes to the private players in the proposed SPV. The monies would be utilised to buy land and develop housing in cooperation with the private companies, who could be either real estate developers or private funds,��� the official added.

���The SPV, if formed and implemented successfully, can turn out to be a great success. Moreover, the PPP model will boost the crumbling housing sector in a big way. It is a win-win for all: the private players, the Centre and the states. The bleeding urban housing housing sector needs a heavy dose of financing,��� said Ansal API CEO Anil Kumar.

According to National Housing Bank (NHB) data, in the past, the government has not been able to meet its targets. In 1999-2000, against a target of 44,000 MIG units, only 27,000 were constructed.