stranded realty projects The loan recovery rate is expected to improve in the current financial year. Apart from rising house prices, changes in rules are also likely to help in this. This hope was expressed in a report on Monday. Domestic rating agency Crisil said in its report that the recovery rate of loans from stuck residential projects is expected to increase to 16-18 percent in the financial year 2024-25, as against 11 percent in the previous financial year. The rating agency said, “This will happen due to healthy demand in the residential real estate sector and increase in house prices, as well as improvement in the viability of stressed projects due to increased interest of investors and promoters in reviving such projects.”
Demand expected to increase by 10-12 percent
Along with this, Crisil said that the recent amendments in the rules of the Insolvency and Bankruptcy Board of India (IBBI) for real estate projects will also strengthen the resolution of stressed real estate assets in the medium term. The amendment made in the bankruptcy rules in February this year enables the resolution of individual projects by separating them from the entire company, including the inter-relationships of multiple projects and groups. According to Crisil, residential demand is expected to increase by 10-12 percent in the top six cities of the country amid healthy economic growth and surge in demand in residential areas.
Big jump in property prices
Apart from this, the low number of vacant houses will also help ARCs (asset reconstruction companies) to quickly turn around the stuck projects with the support of promoters or external investors. Mohit Makhija, Senior Director, CRISIL, said that due to the significant increase in prices in the last two financial years and good demand for residential real estate, vacant units of 3.3 crore square feet area are likely to be sold at increased market prices.
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