IIFCL plans to enter in affordable housing space

In a move that might give a fillip to affordable-housing finance projects, state-owned India Infrastructure Finance Company Ltd (IIFCL) is planning to enter this real estate segments.

A wholly owned Union government company established in 2006, IIFCL provides long-term financial assistance to viable infrastructure projects. Since September 2013, it has been under the regulatory provision of the Reserve Bank of India (RBI) as a registered non-deposit-taking non-banking financial company.

The involvement of a public-private investment structure is crucial, as we have not yet witnessed significant PPPs in affordable housing.

According to Anarock Research data, sales in the budget homes category (priced under `40 lakh) declined to about 20 per cent in the first quarter of 2024 from over 38 per cent before the pandemic in 2019.

National Real Estate Development Council, pointed out that affordable housing often lacked attractiveness for builders.

The issue primarily stems from the cost of funds, which are insufficient for affordable housing projects. Additionally, affordable housing requires secure land allotment, which is not typically within the purview of private builders.

Therefore, the entry of IIFCL into this segment could be a positive development.

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