On Tuesday, Rohtas Goel, chairman of Delhi-based real estate company, Omaxe, bought out the company’s 51% stake in National Affordable Housing and Infrastructure (NAFIL), the affordable housing subsidiary of Omaxe.

This purchase of 2,550 equity shares of Rs 100 each, could easily pass off as an insignificant transaction as the amount involved is just a paltry six lacs rupees paid by Mr Goel. The fact that NAFIL existed only on paper with no revenues on its books makes the transaction all the more intriguing.

When asked for the reason behind this move, Mr Goel said: “The high profile independent directors did not want Omaxe to bear the administrative expenses of a non-performing company, so we thought of divesting its stake in NAFIL to promoter group firms. And since I believed in this business model, I volunteered to buy Omaxe’s stake in NAFIL.”

Omaxe had proposed eighty thousand crore rupees investment in NAFIL, when the company was formed in May this year. This was to develop 10 lakh affordable homes in the next five years. Affordable housing is the segment that has been in demand despite the downturn in the real estate market.

Going ahead, this would be a good business opportunity, both for the investor as well as for the developer. Probably this prompted Mr Goel to increase his stake in NAFIL. Once NAFIL starts generating revenues, Mr Goel’s stake would be worth manifold the value he paid to purchase it.

Omaxe would have the first right of refusal. Still, if it was to pick up stake in the fully operational NAFIL at some point of time, Goel’s flagship firm would have to shell out a far higher valuation.

Affordable housing has been attracting interest both from private equity guys as well as developers. As this segment has seen the maximum demand potential in the near future, it has attracted a lot of other developers as well.

South-based developer Puravankara floated a subsidiary, Provident, for its affordable housing segment. Private equity firm Red Fort Capital (RFC) plans to invest Rs 430 crore over the next two years in affordable housing on the outskirts of Bangalore and Hyderabad.

Global private equity fund Warburg Pincus recently announced an investment of Rs 300 crore in Jaipur-based Mannat Group company, Unique Affordable Homes, for projects in north and west India.

“It’s a general slowdown in the real estate sector which is showing in the advance tax figures,” says Omaxe CMD Rohtas Goel. Omaxe hasn’t paid any tax for September quarter as against Rs 37.5 crore in the year-ago period.

The trouble in the realty sector was evident in the stock market on Monday as the BSE realty index fell 5.26%. DLF scrip touched an all-time intra-day low of 329 despite its previous announcement of share buyback.

Unitech’s advance tax declined by half to Rs 50 crore, while HDIL has paid nothing as against Rs 30 crore last year. Sobha Developers’ tax payment in September fell 60% to Rs 5 crore from Rs 12.5 crore in September 2007. Ansal Properties &Infrastructure paid half the advance tax at Rs 5 crore compared to the year-ago quarter. Parsvnath paid 20% lower tax at Rs 20 crore.

A senior Unitech executive said realty firms operate through hundreds of subsidiaries and so advance tax figure of the parent company may not reflect the health of the group. However, Karvy Stock Broking vice-president Ambareesh Baliga said: “Given the current market scenario when real estate stocks are getting hammered every day, all listed firms would like to show a better profit in the parent company rather than subsidiary.”

One industry executive blames liquidity crunch as one of the reasons for lower advance tax. “Companies may have better profit but not enough cash to pay tax,” he said. Mr Baliga says companies can’t afford to not pay tax despite showing profits. “At best they can defer booking profit to next quarter if they don’t have enough cash to pay tax.”

Meanwhile, DLF’s buyback announcement doesn’t seem to have helped arrest fall in its share price. A DLF spokesman said, “The impact of buyback announcement was not visible on our share price because we have not started the action yet”.

Mr. Ankit Goel, Projects director, Suncity, told, “Through this initiative, we plan to create a niche brand identity for Suncity malls.” With over 400 new malls slated to open in the next two-three years, differentiation is becoming the key, not just to attract shoppers but tenants too.

Apart from size, another unique feature of Jewel of India would be exclusive space for ethnic products, much on the lines of government-run Delhi Haat. Mr Goel added “It will provide a traditional flavor to the malls. We strongly believe that these products symbolize the true essence and culture of our society”. However, Mr Goel denied that they have similar plans for their existing, smaller Suncity malls.

Currently, the company has three shopping malls — Cross River, North Square & Vasant Sqaure — in Delhi, which are all spread over less than a million sq ft. Suncity Projects, a consortium of the Essel Group, Action Group and Odeon Builders, intends to tap the capital markets though an initial public offering in the second half of 2009.