HDFC & Brookfield JV on Real Estate Dedicated ARC in Pipeline

HDFC is keen to launch a real estate-dedicated asset reconstruction company (ARC) with Brookfield, one of the world’s largest realty management firms, Chairman Deepak Parekh has said. HDFC is awaiting regulatory approval for the joint venture and aims to use it to provide last-mile funding and help resolve stuck projects. Pointing out that an ARC will be a win-win situation for all, Parekh said that developers will get access to last-mile funding and existing financiers, having already provided for such loans, will have more options to sell bad loans seamlessly and focus on incremental lending rather than get embroiled in the legalities of resolutions. “It will also facilitate a new cadre of much-needed professionals with real estate expertise to resolve such loans,” said Parekh. Parekh said that the stressed assets in the real estate sector are estimated to be close to Rs 1.3 lakh crore, or about 18% of overall lending to the sector. “Fortunately, more resolutions are falling in place. Global investors, including otherwise conservative pension funds and sovereign wealth funds, are seeing immense opportunities in investing in Indian real estate to counter low or negative yields in their home countries,” said Parekh.