It is too early to jump to conclusions and assign names like this. It is not like mixing some masala and asking for customer opinion in minutes or hours. Even a decent affordable housing project should take 0.5 to 1 year to get the project right (at least at the start) and then it will go into execution mode which includes paper work, actual construction, marketing, sales and finally success. For all the developers getting the cost right, particularly to cut various costs by doing pre-fab, using certain standard constructs and thus driving down the cost from every angle is the most important aspect. The outcomes will be visible 2-3 years from the start.
And do note that not everyone will succeed and get it right, probably few projects down the line they may get it right. So sticking to a good developer who is able to afford the setback and lend him is the game. I think Kushru Jijina has articluated it very well at the Piramal Housing launch con call. So we have to keep that in mind.
Another statistic revealed by Sanjay Gupta was an average housing loan in India runs for 83 months (7 yrs) and a LAP runs for 60 months (5 yrs) and construction finance 28-32 months (3 yrs). By end FY19 (3-4 qtrs from now) and FY20 onward you can see lots of affordable projects being marketed and sold in the market. So for affordable housing the current opportunity lies in construction finance for every lender. Those who calculate the risk involved in each of the project and price it appropriately will be the winners.
In this regard, PEL management has articulated that they have ability to structure the deals such that, bring in equity or debt during the early stages, doing pre-construction financing, switching over to constrution financing and finally tapping the end customers also to get into housing loans or LRD’s. Thus in all stages they partner with the developer and provide value to him including the use of their Brickex platform. That means a project developer gets PEL more as a partner cum lender than as pure lender.
Yes there are unknown risks, but Kushru has pointed out how the NPA’s has gone down over the years while they have continued to expand their financing capabilities. GNPA of 0.4% is an outcome of what the management says.