Good morning, as the real estate vs. crypto investment debate heats up worldwide, you need to ask yourself this:
Would you rather buy a tub of butterscotch ice-cream or a smart tv? Yes, they are two completely different worlds, with their own set of risks and rewards.
💡 And no matter how much money crypto brands pump into their PR to woo real estate investors, the girl writing out the check will view each as a non comparable asset class with the other.
🚴♀️🏋️♀️🍌🥛
P:S: Did you win those trendy boAt wireless earbuds? Keep reading and find out who did.
NBFCs Face Increasing Real Estate GNPAs
As a thumb rule, whenever you see a pair of 4-letter acronyms in one headline, you should know it can't be good news. So, what's happened now?
For starters, non banking financial companies (NBFCs/non-banks) appear to be sitting on a ticking time bomb, even as the real estate sector celebrates its great revival.
Wait... What?
Oh yeah. Real estate gross non performing assets - a non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days - for NBFCs are on their way to the penthouse.
Per a recent ICRA report:
🙂 March 2019 - 2.1% GNPAs
😐 March 2020 - 5.1% GNPAs
🙁 March 2021 - 6.2% GNPAs
😣 September 2021 - 6.8% GNPAs
😨 Near future - expected to exceed 9% GNPAs
Something Happened On The Way To Heaven
NBFCs that funded real estate companies were having a good run till H1, FY19 (September 2018), thanks to easy access to capital and ample investor interest, aided by a steady demand outlook.
However, come H2, FY19 and non-banks balked and witnessed a significant slowdown in growth, following the liquidity crisis, moderating their disbursements to check the bleeding.
And, as NBFCs grapple with fund-raising challenges and asset quality issues, their growth is taking the express elevator to the basement.
The Way Ahead?
While the real estate sector is celebrating some emerging green shoots in recent quarters, mostly due to large listed developers with deep pockets, a sustained pickup in sales across geographies and segments is the key to a meaningful recovery in the sector, per ICRA.
And what happens to buyers in projects that are stuck in limbo? In reality, phrases like 'every man for himself' and 'free for all' come to our minds.
GCC Realty Is On Track Again
Per a recent report by the Kuwait Financial Centre, this year, the real estate market in the GCC region is poised for continued post-pandemic recovery and sustained growth.
Zooming In
📌 The GCC real estate sector will rebound and remain stable through 2022 due to varying factors ranging from overall economic growth to supportive government measures.
📌 In the Saudi region, real estate is being mainly driven by sustained economic momentum, government spending on Vision 2030 infrastructure projects, and robust oil prices.
📌 Specifically, Kuwait's estate market is expected to experience stability following the performance achieved last year, supported by the reopening of economic activities.
Look Ma, A Ghost Village
Tourism can take bizarre forms, like drawing folks from all over the place to experience the beauty of a severe drought.
Fill My Glass Please, How?
A ghost village that has emerged as drought nearly emptied a dam on the Spanish-Portuguese border, is drawing crowds of tourists with its eerie, monochrome ruins.
With the reservoir drying down to 15% of its capacity, details of a world submerged in 1992 - when the Aceredo village in Spain was flooded to create the Alto Lindoso reservoir - are being revealed once again.
💭 "It's terrible, but it is what it is. That's life. Some die and others live," said a construction worker recalling his days of employment at Aceredo.
Deep dive into this CNN Story. Image: Reuters.
SC To MOHUA: Is It Working? Report Back Please
Rolling out a grand beneficial policy is one thing but making sure it is being implemented to help the common homebuyer is a different tale altogether.
But thank the stars for our apex court and its follow-ups.
Hey! What Happened To That?
The Supreme Court has directed the ministry of housing and urban affairs (MOHUA) to find out whether the rules adopted by various States under RERA comply with those framed by the Centre or is it a careless free for all at the State level.
On Valentine's Day, a bench of Justices D Y Chandrachud and Surya Kant gave the Centre 90 days to figure out if there are any deviations in the rules framed by the states to those laid down by the Centre in 2016.
The deadline to present the report is the first week of May, 2022, per this detailed report by Vandana Ramnani.
How Did We Get Here?
With time, there were increasing instances of deliberate inordinate delays by builders in handing over apartment possession, and when homebuyers lodged complaints, the police did zilch, citing arbitrary clauses of the agreement.
📅 On October 4, 2021, the apex court directed the Centre to frame model agreements for builder-buyer and agent-buyer transactions, to usher in more transparency to the home buying process.
📅 Then, on November 8, 2021, the Supreme Court reiterated that a model builder-buyer agreement is needed ASAP and the Centre should file its reply on the issue as it is an "important matter in the public interest."
📅 Lastly, on January 17 this year, the top court told the Centre that it was not in favour of state governments having separate builder-buyer agreements, but would rather prefer a national-level model to deter builders from leaving homebuyers in limbo.
Middle Class Folks Rattled By Budget22?
Here are some words of relief:
🎙 "We are concerned about the broader public interest of the middle-class homebuyers,", said Justices Chandrachud and Surya Kant, as they pushed MOHUA for the compliance report.
Chai's Giveaways
Ginger Chai reader TineshB@XXXXXXXX.com is the one receiving these wireless earbuds in the mail pretty soon.
We can't even share the full name because we never ask our subscribers for anything more than their emails. We feel that's enough because with more data comes more responsibility.
📦 If you're feeling missed out, we have a bunch of cool gizmos coming your way. More on that next week.
---------------
Just in case you forgot, the Beijing Olympics are in their second and last week. Want to know which countries bagged how many medals, so far?
Reuters' medal tally page has it all.
Not to worry, we won't ghost you tomorrow morning. 💚
☕ The Crew@Ginger Chai