Crisis is here to stay despite liquidity boost, say realtors

According to Anarock Property Consultants, about 560,000 houses, worth Rs 4.5 lakh crore, are either stuck or delayed across seven cities mainly due to the dearth of funds.
NHB to infuse funds in NBFCs to improve inflow, realtors feel the problem is here to stay.
NHB to infuse funds in NBFCs to improve inflow, realtors feel the problem is here to stay.

Even when the aftershocks of Infrastructure Leasing & Financial Services crisis is yet to settle, the Kotak Realty Fund has recently flagged fresh concern over a USD 65 billion bad-loan crisis in the real estate sector. As the Finance Ministry has announced some measures including National Housing Bank (NHB) infusing an additional Rs 10,000 crore in NBFCs to improve funds inflow, realtors feel the problem is here to stay for some time.

“There is no change in the liquidity problem for the real estate sector. Lakhs of houses are stuck because of delay in completion, and that can only be solved if banks start lending. The need is to put the real estate in ‘priority loan’ status. If banks are facing problem then government should look into it. As far as we are concerned, we know that we have to deliver houses and that is only possible when funds are available,” said Harvinder Singh Sikka, MD, Sikka Group.

According to Anarock Property Consultants, about 560,000 houses, worth Rs 4.5 lakh crore, are either stuck or delayed across seven cities mainly due to the dearth of funds.

“The government has announced some measures but it seems that banks and the RBI are not on the same page with the government. In fact, the Central bank has asked NBFCs to scale down their exposure to the realty sector,” said a developer from NC.

Developers have either to access fresh loans to complete buildings or raise equity and infuse funds into the stuck projects, to ensure such construction projects get into cash flow generation mode, explained Vikas Chimakurthy, CEO, Kotak Realty Fund. And this won’t be possible until lenders recognise the stress and take haircuts.

“Lenders should realise that they have to resolve these bad loans before the problem gets messier… It is in a kind of gridlock situation. I think by March, things will become more difficult, and lenders need to resolve these issues immediately,” he added.

The government on Friday had announced that NHB will infuse another Rs 10,000 crore for Housing Finance Companies (HFCs).

“To further ease flow of funds to the housing sector, the NHB is making available from today, a liquidity infusion facility of Rs 10,000 crore for HFCs as additional liquidity for individual housing loans, for affordable housing,” a statement from the Finance Ministry said.

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