98% Hyd realty loans stress-free: Anarock

At least 67% of the total loan advances at $100 bn to Indian real estate by banks, NBFCs and HFCs is completely without any stress

Hyderabad: OUT of $3 billion worth loan advances given to Hyderabad-based real estate firms by banks, non banking financial companies (NBFCs) and housing finance companies (HFCs), as much as 98 per cent is completely without any stress, reveals the latest study by property consulting services agency Anarock Capital. As per the study, Hyderabad comprised 3 per cent share at $3 billion out of the total $100 billion loans given to Indian real estate. Currently, 67 per cent at $67 billion worth loans to the realty companies in the country are stress-free. However, $18 billion worth loans are under 'severe' stress that needs immediate measures to ease the burden.

Pune and NCR Delhi are both high on stress with 40 per cent and 39 per cent respectively of the total loan given to them, followed by Mumbai with 37 per cent. Kolkata and Chennai are well placed with just 3-4 per cent stress. Bengaluru with a 15 per cent share of overall lending has 76 per cent book with no stress at all.

Shobhit Agarwal, MD and CEO - Anarock Capital says, "Covid-19 has had a cascading impact across sectors, and 'severely stressed' loans levels in Indian real estate were expected to go up substantially. However, real estate – particularly the residential segment - has fared better than anticipated. Towards 2019-end, of the total real estate loan of $93 billion, at least 16 per cent was severely stressed."

"Despite the devastation of the pandemic over the last one year, only 18 per cent of the total loan value falls under this category. This is definitely far better than other major sectors such as telecom and steel. Moreover, the entire 'severely stressed' loan value in real estate is spread across more than 50 developers," he adds. "In telecom and steel, default by a single company equals a sizable portion of the overall stress in the real estate sector. Also, every real estate loan is backed by hard security, which is anywhere between 1.5 to 2 times. Even if the loan is NPA, there is enough security for the lenders to recover a significant portion of their money," Agarwal informed.