The real estate sector is saddled with loans worth over Rs 6.63 lakh crore, of which alm-ost 15%, or roughly Rs 99,773 crore, is under 'severe stress', data from Anarock Property Consultants revealed. Of the total loans under 'severe stress', Delhi-NCR and the Mumbai Metropolitan Region (MMR) alone account for 93% of the share.
"Of the total real estate loan of $93 billion (around Rs 6.63 lakh crore), NCR, MMR and Bangalore together account for a whopping 80% share ($74 billion, or Rs 5.20 lakh crore)," Anarock said in a report. The exchange rate taken is Rs 71.23 for every $1.
Of the overall loan amount, around $14 billion (Rs 99,773 crore) is under 'severe stress' while nearly 62% (around $58 billion, or Rs 4.13 lakh crore) is completely stress-free. The remaining 22% ($21 billion, or Rs 1.50 lakh crore) is under pressure, but can potentially be resolved, it added.
Of the total Rs 2.49 lakh crore loan advances given to developers in MMR, nearly Rs 61,971 crore (25%) is currently under ‘severe stress’. This is almost double the total stressed loan amount in NCR (at Rs 30,629 crore). The NCR real estate market has so far received loans worth Rs 1.64 lakh crore from banks and NBFCs/HFCs, Anarock Capital managing director & CEO Shobhit Agarwal said.
"Liquidity crunch in the country's top two real estate markets is unrelenting. Both markets collectively have loans worth $13 billion (around Rs 92,600) under ‘severe stress’ with extremely poor prospects of recovery from the borrowing developers. Previously, many developers engaged in high leveraging and also engaged in fund diversions. To compound the problem, housing sales have remained tepid over the last few years, resulting in depleted cash reserves," he explained.
However, Bengaluru fares much better in terms of stressed loans. Merely 1% (or around Rs 1,140 crore) of the total Rs 1.14 lakh crore of real estate loans in the city is in the ‘red alert’ category, which is a result of better financial discipline of the city’s developers, lower demand and supply mismatch as well as range-bound property prices to ensure gradual rather than haphazard growth.
"Bangalore supersedes NCR and MMR in servicing its debt to banks, NBFCs or HFCs. The city has much better stress-level readings with over 70% of the total loans completely stress-free. In NCR, the stress-free share is at 53% and in MMR, it is 58% of the total loan advances," the report said.
Pune, Hyderabad and Kolkata received realty loans worth $3.7 billion (around Rs 26,361 crore) each, of which nearly Rs 2,351 crore and Rs 285 crore is under ‘severe stress’ in Pune and Kolkata, respectively. Interestingly, no loan amount in Hyderabad is under severe stress.
‘Others’ comprising close to 90 cities (Tier II, III and IV cities) across the country and the overall ‘severe stressed’ loans in all these equals $470 million (around 3,349 crore). Some of these cities include Ahmedabad, Kanpur, Chandigarh, Gwalior, Lucknow, Ranchi and Bhopal. These cities collectively received real estate loans worth Rs 3.34 lakh crore.