Rs 7,700-crore realty NPAs up for sale

Indicating the worsening stress on the realty sector, an estimated Rs 7,700 crore (Rs 77 billion) worth of commercial and residential properties loans are up for sale, according to an industry report.

Data compiled by NPAsource.com, a portal that focuses on resolution of stressed assets, shows that there are around 2,200 units in the commercial category and nearly 11,000 units in the residential segment funded by banks and other financial institutions and valued at over Rs 7,700 crore, which have turned NPAs and are on the block.

The portal has NPA data of properties worth around Rs 27,500 crore (Rs 275 billion) spread across 27,626 units.

Out of this, commercial NPA properties have a 15 per cent share in value term, while residential properties constitute 13 per cent.

The lion's share of bad assets come from the industrial land and building category constituting over 65 per cent share in value terms, the portal said.

Portal Chairman D K Jain said Maharashtra, largely due to Mumbai, tops both the commercial and residential categories with Rs 842 crore and Rs 838 crore worth NPAs, respectively.

Delhi follows with Rs 686 crore worth of commercial NPAs and Rs 500 crore (Rs 5 billion) worth of residential NPAs.

Andhra is at number three in residential properties with Rs 497 crore (Rs 4.97 billion) worth of NPAs up for sale under.

Tamil Nadu, Bengal and UP are the next three states with highest value of commercial and residential NPA properties, he said.

Though Mumbai leads the space in realty NPAs, Delhi leads on the single-NPA front, with a New Delhi office property, valued at Rs 200 crore at the base price turning bad and followed by a farm-house in the Capital with a base value of Rs 40 crore (Rs 400 million).

Against this, the priciest two Mumbai properties pale in value with a base price value of Rs 26.5 crore (Rs 265 million) and Rs 24.6 crore (Rs 246 million),

respectively, said Jain.

"As NPAs in the corporate sector continue to grow, there will be more commercial and residential properties coming up for auction.

"The slowdown in realty markets has further added to the woes of the lenders who will not be able to generate higher returns by selling these mortgaged properties," said Jain.

According to the half-yearly financial stability report of the RBI released yesterday, the gross NPAs in the system is set to rise to 4.6 per cent by September 2014 from 4.2 per cent in September 2013 or about Rs 2.29 trillion from Rs 1.67 trillion a year earlier.

The amount of recast loans touched an all-time high of Rs 4 trillion or 10.2 per cent of the overall advances.

The report also warned that in case the economic conditions deteriorate, the same number will be at the 7 per cent mark by March 2015.

The state-run banks will be the worst affected, the FSR said, pegging the GNPAs for public sector banks to touch 4.9 per cent by March 2015, while the same for new private sector banks will be 2.7 per cent.

If the restructured assets are added, the total stressed advances ratio rose to 10.2 per cent in September 2013 from the 9.2 per cent in March 2013, the RBI said.

The report said though agriculture accounted for the highest GNPAs at 5.5 per cent as of the quarter to September 2013, it is the industry with a GNPA of 4.9 per cent and 10.9 per cent of restructured which is the main culprit.