Parekh seeks special debt recast for realty

At a time when real estate developers are reeling under the pressure of piling up of inventories resulting in bad loans for lenders, Deepak Parekh, chairman of Housing Finance Development Corporation, has suggested a one-time debt recast of such loans without classifying them as ‘non-performing’.

‘Crisis of confidence’

“I do believe that we can overcome this crisis of confidence if lenders are allowed a one-time restructuring of certain real estate loans, particularly for stuck projects where building approvals have been delayed,” Mr. Parekh said at event on mortgage financing.

“If these restructured accounts are considered as standard assets for a period of say, 12 months, lenders will stop being so diffident,” he said, adding that such an exception was also permitted in 2008.

Mr. Parekh also said he saw real estate investment trusts (REITS) emerging as a preferred alternative investment avenue in future.

“It is estimated that nearly $20-25 billion could be raised by commercial real estate developers over the next three to four years. Currently, there is just one listed REIT, but a couple of developers have told me that they are ready to launch REITs and monetise their assets,” he said.

The HDFC chairman said while REITS had been focusing on ‘Grade A’ commercial property, in future, residential assets too would be part of listed REITs as seen in countries such as Singapore and Hong Kong.

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Printable version | Apr 14, 2021 1:48:05 PM |

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