With $8.7 bn in ‘severely’ stressed realty loans, Mumbai tops the list

Prospects for loan recovery extremely poor, says report

The Mumbai region has topped the list of Indian cities with the highest level of stressed assets in the real estate sector.

Of a total of $35 billion loans advanced to developers in the Mumbai Metropolitan Region (MMR), almost $8.7 billion (or 25%) is currently under ‘severe’ stress, according to a report.

This is about double the total stressed loan amount in the National Capital Region (NCR) estimated at $4.3 billion, a research report by Anarock has showed. The NCR real estate market has so far received total loans worth $23 billion from banks and NBFCs/HFCs.

However, for Bengaluru, a mere 1% ($160 million) of the total of $16 billion of real estate loans in the city are in the ‘red alert’ category.

“The liquidity crunch in MMR and NCR is unrelenting. Both markets collectively have loans worth $13 billion under ‘severe’ stress with extremely poor prospects of recovery from the borrowing developers,” said Shobhit Agarwal, MD and CEO, Anarock Capital.

“Previously, many developers engaged in high leveraging and also in fund diversions.

“To compound the problem, housing sales have remained tepid over the last few years, resulting in depleted cash reserves,” Mr. Agarwal said.

‘Better’ stress level

As per the report, Bengaluru has a much better stress-level readings with over 70% (of the total $16 billion loans) completely stress-free. In NCR, the stress-free share is at 53% and in MMR, it is 58% of the total loan advances.

NCR and MMR have a 91% share of severely stressed loans totalling $13.2 billion. Hyderabad and Kolkata hardly have any stress. Chennai received loan advances worth $2.8 billion, of which only $310 million is under severe stress.

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Printable version | Feb 23, 2020 2:10:26 PM |

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