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This article is more than 2 month old.

Real estate sector loans worth $18 billion under severe stress: Anarock

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Property consultant Anarock, however, said in its report that at least 67 percent or about $67 billion of the total advances to the sector is now completely stress-free.

Real estate sector loans worth $18 billion under severe stress: Anarock
Around $18 billion loans of the overall lending to the real estate sector by banks, NBFCs and housing finance companies (HFCs) are under 'severe' stress, a report released by a consulting firm said on Monday.
Property consultant Anarock, however, said in its report that at least 67 percent or about $67 billion of the total advances to the sector is now completely stress-free.
COVID-19 has had a cascading impact across sectors and severely stressed' loan levels in the Indian real estate industry were expected to go up substantially. However, the construction sector particularly the residential segment – has fared better than anticipated.
"Towards 2019-end, at least 16 percent of the total real estate loan of around $93 billion was severely stressed. Despite the devastation of the pandemic over the last year, only 18 percent of the total $100 billion loan value falls under this category. This is far better than other major sectors such as telecom and steel, Anarock Capital MD and CEO Shobhit Agarwal said.
The consulting firm expects that another $15 billion loans are under "some pressure but has scope for resolution. Non-banking finance companies and HFCs together account for 63 percent of the nearly $100 billion outstanding loan portfolio of the sector, while banks' contribution is at 37 percent, the report said.
Agarwal said at least 75 percent of total advances to grade 'A' developers is safe, and a large portion of loans to grade 'B' and 'C' real estate players needs monitoring.
Grade 'A' developers are companies that are currently active with a good execution track record and have developed real estate of more than 3 million sq ft till date.
Grade 'B' players include those who are currently active with an established execution track record and having a developable area of more than 1 million sq ft but less than 3 million sq ft, while grade 'C' comprises developers with less than 1 million sq ft developable area.