NPAs in real estate will inch up in short term before settling: Keki Mistry

Non-performing assets (NPAs) in real estate will go up in short term before settling down, Keki Mistry, vice-chairman and CEO at HDFC, said on Thursday.

"NPAs in real estate will inch up in the next one or two quarters before they stabilise in the next three to four quarters," Mistry said at a webinar organised by industry bodies Naredco (National Real Estate Development Council) and Asia Pacific Real Estate Association (APREA).

Mistry said the restructuring announced by Reserve Bank may not help all developers as many may not be able to meet terms attached to it.

On the interest rates, he said benign interest rate regime would continue for the next 6-12 months. "Interest rates are at the lowest in the past four decades. Property prices have gone up in the last many years," he said.

Mistry said markets at present are distinguishing between strong property developers and weaker developers unlike in the past.

"In 2017 or 2018, the gap between lending rates given to AAA developers and AA developers was limited. But today, it depends on the credit profile of developers," he said.

He said some developers had earned a bad name due to analyst reports, media reports on oversupply and so on. 

"Weaker developers will find it difficult to raise funds unless they reduce leverage," he said.

Mistry said the demand for residential properties had picked up. "People are beginning to believe that it is the best time to buy. Interest rates are at an all time low. Prices have not gone up," he said.

He also said that the Maharashtra government's move to cut stamp duty helped residential sales in the state. "More such measures by other states will help real estate sales," he said.