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    Goliaths of India property rise as slowdown swallows small firms

    Synopsis

    India’s top real estate cos saw sales jump 159% in the year ended March from 2017, when the slump began.

    By Dhwani Pandya
    Indian home buyers are flocking to the nation’s well-funded publicly traded developers as risks of stalled and delayed housing projects mount at smaller players in the industry.

    While overall home sales remain weak, India’s top nine listed real estate companies saw sales jump 159% in the year ended March from 2017, when the slowdown began, Anarock Property Consultants said in a report this month. These developers also reduced their debt by a total 8% during the period while competitors struggled to survive.

    The revival is seen in the stock market, where the S&P BSE Realty Index has surged 21% this year - three times as much as the broad BSE 500 Index - and is set for its biggest annual gain since 2017. The property gauge is also the best performer among 19 sectoral sub-indexes compiled by BSE Ltd.

    Compare this performance with India’s broader real estate industry, where as many as 500 firms face bankruptcy and Citigroup Inc. estimates as much as 800 billion rupees ($11 billion) of debt is locked within incomplete projects. A credit crunch is feeding into - and worsened by - an economic slowdown that’s hitting Indians’ demand for goods and services.

    Home buyers are going to listed companies to mitigate the risk of their apartment building being left unfinished, Anarock Chairman Anuj Puri said.

    property-graphBloomberg

    Signs of Consolidation:
    Market share of top 10 listed realty developers increased to 15% in the first half of 2019 from 11% in 2018 and 8% in 2016, according to India Ratings
    Number of developers in India has plunged by 46% between 2012 and 2018, according to Edelweiss Securities Ltd.

    Number of property firms tipped into insolvency has more than doubled over the past year

    While the government plans to set up a 250 billion-rupee fund to salvage stalled residential projects, it is estimated to only be sufficient to salvage some 6% of constructions that are running behind schedule.
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    11 Comments on this Story

    Ram Nath230 days ago
    Every builder or common man has to obtain a air force noc.. A new type of corruption by ministry of defense.. And this when there is no airforce station nearby
    Shri Mahesh347 days ago
    Time to consolidate real estate sector. Tie up with similar groups. Sell properties at discount. Cheers
    Sameer 347 days ago
    in short the rich are becoming super rich while the poor continue to suffer
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