ARCs to see 5-7% higher recoveries from residential realty in FY25: CRISIL Ratings
ARCs) in India are projected to see an increase in recovery rates for stressed residential realty projects, rising to 16-18% by March 2025 from 11% in March 2024, owing to healthier demand, price appreciation in the housing property market and greater interest from investors and promoters, said CRISIL Ratings.
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Additionally, recent amendments to the Insolvency and Bankruptcy Board of India (IBBI) regulations are expected to expedite the resolution of stressed real estate assets in the medium term, enhancing the overall recovery process for ARCs.
An analysis of the CRISIL Ratings security receipts (SRs) portfolio, comprising nearly 70 stressed real estate projects with saleable area of 66 million sq ft with outstanding SRs of Rs 9,000 crore, indicates as much.
Healthy economic growth and buoyant residential demand across housing segments in the top six cities will lead to 10-12% growth in residential realty demand this fiscal. Low unsold inventories across major micro markets will also help ARCs turn around stressed real estate projects faster with support from promoters or external investors.
About three-fourths of the projects analysed turned into non-performing assets (NPA) between 2019 and 2022 and were impacted by falling sales and slower collections during the Covid-19 pandemic. The
