With the real estate boom and the IT industry's employment issues, attention is being drawn to Bengaluru's stressed assets, estimated to be worth more than Rs 1,000 crores. There are many options to be explored as the investment environment improves and more funds that specialize in distressed assets become available. According to market sources, there are over 170 projects in Bangalore that are stalled or qualify as stressed assets. These developments, which mostly fall under the mid- and luxury-segment categories, are dispersed throughout Bengaluru's micromarkets in the northwest, northeast, southeast, and southwest. While flats make up 80% of these developments, these assets also include villas, making up 20% of the total. Angad Bedi, Managing Director of BCD Group, said, “Stressed assets have a sizable share in the country’s real estate landscape, though the share has started to come down considerably after the post-COVID rebound of the sector".
"In Bengaluru, there are assets in the mid and luxury segments which are garnering attention to be redeveloped, thus unlocking a lot of potential. Last year we entered into a JV partnership with a leading fund manager and identified stressed residential projects of around Rs 1,000 crore, totalling five million sq. ft across Bengaluru", he added. Besides, the Centre’s Special Window for Affordable and Mid-Income Housing (SWAMIH) investment fund that successfully revived several projects will give a further push to the stressed assets that are spread across various micro-markets in Bengaluru. As far as the effect on the future of real estate prices is concerned, I think the revival of these projects will create a good supply of inventory, thus creating favourable buying conditions, Angad Bedi states.
Navin Dhanuka, MD and CEO, ArisUnitern, explained, “In Bengaluru, there are more than 5 million sq.ft of projects that fall under the distressed categories. Mostly these projects fall under the mid and luxury segments, though there are a lot of affordable projects as well. When it comes to the proactive steps that have been taken to de-stress or revive these assets, I think the emergence of various distressed asset funds by foreign and domestic players is changing the game. Besides, a lot of big players have put into practice the development management model that is enabling smaller project owners and builders to complete their projects".
"There are professional agencies like us that are adept in lending funds, expertise, and end-to-end project management services to help developers complete a project. The government is intervening through the Special Window for Affordable and Mid-Income Housing (SWAMIH) investment fund, introduced in 2019 to relieve these assets. Overall, this will definitely influence the price. With the introduction of new supply, people will have more affordable options, while developers will be able to leverage on the economies of scale,” he further added.
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