Chennai: The real estate sector has filed 115 insolvency cases till September and $1 billion has already been transacted under stressed asset deals in 2019.
Corporates saddled with huge debt have been increasingly liquidating real estate assets and investors are evaluating options including acquiring non-performing assets, distress sale and entity level stake. Around $1 billion has already been transacted in the current year, as per the data from JLL India.
Some of the recent stressed asset deals include sale of an IT park in Bengaluru by Café Coffee Day Enterprise for $385 million to reduce its debt. Blackstone and Salarpuria Sattva Developers have acquired the 90-acre, IT-focussed Global Village Tech Park. Similarly in hospitality sector, Brookfield has received approvals to acquire assets of Hotel Leela Venture comprising key hotel properties in Delhi, Bangalore, Udaipur and Chennai for $564 million.
As per the Insolvency and Bankruptcy Board of India, a total 115 insolvency cases have been filed as of September 2019 under real estate category. Of these 87 cases are under process while 28 are closed.
Residential real estate segment presents the maximum number of stressed assets. India’s residential sector has been reeling under the pressure of delayed/stalled projects with 4.54 lakh units running behind their completion dates. Some of them are already under bankruptcy proceedings. The value of these projects is estimated to be $66 billlion, according to JLL.
“The capital commitment by institutional investors gives comfort to the lenders leading to faster resolution in these deals. Such deals also provide opportunity for investors to optimise their returns in line with underlying risks,’ said Ramesh Nair, CEO and country head, India, JLL.
Though government has announced a special fund to infuse liquidity into the sector, it will fall short of meeting the entire requirement. So, several projects will move into insolvency process, providing an opportunity for investors.
