Real estate players, already battling a slowdown in sales, are likely to see their woes intensifying, with interest payments against loans eating up into their cash flows in March.
While top listed developers have a combined debt of around Rs. 32,000 crore, unlisted players have a collective debt of Rs. 1.6 lakh crore on their balance sheet. The payment towards these loans would be anywhere around Rs. 5,000 crore for top Bombay Stock Exchange (BSE)-listed realty players in March.
"The total debt for listed companies look huge, but most of it is on books of top two or three players," said Shobhit Agarwal, joint managing director, capital markets, Jones Lang LaSalle India. "Also, a lot of this debt is self-liquidating and so there may not be an impact on prices directly."
Also for unlisted players, the total debt has gone up by 14% between October 2010 and September 2011, an IDFC report has said. While banks are steering away from smaller realty players, non-banking financial companies or NBFCs have been largely lending to the sector.
According to industry experts, lending rates to realty players are very steep. Even for reputed real estate companies interest rates range anywhere between 15% and 16%. While some NBFCs are charging anywhere around 18-20% interest to realty players, some private lenders are charging anywhere around 24%-36%.
"The pressure would be different on different developers but most of the top developers are hiving off their assets than reducing prices in their projects for retail buyers," said the CEO of a realty company.