ARCs to see recoveries improve from stressed residential projects
ARC expected to see 5-7% increase in recovery rates of stressed residential projects. Recovery rates to reach 16-18% by March 2025 due to rising prices, demand, and investor interests.
Asset Reconstruction Companies () are expected to see an increase in cumulative of stressed residential projects by 5 to 7 percentage points, with underpinning the return to solvency for several projects previously stuck with .Recovery rates are expected to touch 16-18% as of March 2025, from 11% a year ago, said a report by .
Rising prices in residential real estate, healthy demand and better investor and promoter interests should aid the recovery. Crisil Ratings analysed the portfolio of about 70 stressed assets with outstanding security receipts of ₹ 9,000 crore.
ARCs typically offer security receipts in lieu of future recoveries and subsequent payments to the original lender to the property developer concerned.
"Stressed realty projects are becoming viable for as about 33 million sq ft of unsold inventory for projects analysed is likely to be sold at appreciated . This is because of a significant increase in prices over the last two fiscals and healthy demand for residential real estate," said , senior director at Crisil Ratings.
Sector-specific Insolvency and Bankruptcy Code (IBC) regulations, amended in February, are expected to quicken the resolution of stressed residential real estate projetcs.
These amendments allow the resolution of individual projects by delinking them from the entire corporate entity that involves multiple projects and group inter-linkages.
Source: Stocks-Markets-Economic Times
