New Delhi, June 16 (IANS) The cumulative recovery rate of security receipts (SR) released by Asset Reconstruction Companies (ARC) for the crushing real estate projects will increase by 16 percent to 38 percent during the current financial year. This information was given in the report released by Crisil on Monday.
The report stated that this improvement will depend on the strong sales of new units in these projects, which have been possible due to stable demand in the residential real estate sector and strategically restructuring of loans by ARC.
Crisil’s report is based on analysis of 70 threatened real estate projects located in NCR, MMR3 and Micro Markets in Bangalore, with SRs worth about Rs 10,800 crore.
Most of these projects were trapped in the rising debt cycle due to declining sales, slow recovery and lack of funds to meet construction.
The report further stated that the increase in real estate prices and increasing demand in micro markets has led to a rise in sales as a result of increasing demand in micro markets, making these projects viable for funding by external investors.
The report stated that the demand for residential immovable property in NCR, MMR3 and Bangalore’s micro markets is expected to increase by 7-9 percent in 2025-2026 and it will also support the sale of these crisis-affected projects.
Nearly two-thirds of the rated projects are and above, which is expected to contribute up to 80 percent to the recovery of ARC due to stable demand in FY 26.
The report said that the remaining projects are from the affordable segment, which are expected to be modest and will contribute less to the recovery in this financial year.
According to the report, the restructuring of the loan for two reasons has emerged as a preferred solution strategy for crisis -affected real estate projects.
First, the initial restriction on ARC payments can bring the loan to a bustable level, making developers redirect cash flow towards the construction of units in these projects.
The second reason for the ARC to be reorganized by the ARC is the underlying issues in the real estate sector, including dual ownership and development rights of the land, approval from state authorities with cross-collectorates, etc.
-IANS
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