Cash-heavy HDFC looks at distressed realty projects

The funds are yet to buy any projects, but he said there could be opportunities within six months if the current downturn in the realty sector continued.

“I would like to see both my funds, the international and the domestic fund, play a much greater role in takeovers and buyouts of real estate projects which are facing difficulty,” Parekh told Reuters in an interview on Thursday.

India’s top mortgage lender, in which Citigroup holds a stake of about 12 per cent, had an $800 million property fund that was raised overseas, and only a third of it was committed, he said.

Its asset management unit raised almost Rs 40 billion under its real-estate portfolio management services business last financial year and has invested only Rs 3 billion, Parekh said.

“I expect that some of the developers who have bought land at exorbitant prices will not have the wherewithal to complete the development,” said Parekh, who has been with HDFC since 1978. He became chairman in 1993. “We will function like an asset reconstruction fund,” he said. After five years of boom, real-estate firms are battling tepid sales and a cash crunch, with buyers scared away by rising interest rates and some signs of softening in property prices.