Residential real estate consolidation in India set to gain momentum


Consolidation in residential real estate is expected to accelerate further, with the market share of large listed developers expected to grow over the next two to three years. Indeed, buyers are turning to the major listed brands.

The pan-India residential market share of major listed developers will rise from 25% in FY21 to 29% in FY24, according to a recent report by ICICI Securities.

“Most developers in the listed space have aggressive launch plans starting in the second half of this fiscal year and are looking to grow at a double-digit sales CAGR (compound annual growth rate) over the next two to three years. This will lead to market share gains assuming industry size remains stagnant. We assume that the overall annual value of sales in the residential market will remain similar to fiscal year 2023 and 24 levels,” said said Adhidev Chattopadhyay, vice president, equity research – real estate – at ICICI Securities.

Chattopadhyay believes that due to healthy balance sheets, access to capital and the crowding out of many unlisted developers, the market share of large organized developers is expected to grow further over the next two to three years.

For example, Godrej Properties is looking to invest $1 billion over the next two years to acquire land and develop properties. It is looking to have a sales reservation of Rs 10,000 crore by FY23.

Pirojsha Godrej, Chairman of Godrej Properties, in the latest annual report, said the company remains committed to two medium-term goals of being among the top promoters by value of home sales and achieving return on equity ( RoE) of more than 20%. . “Progress in market share gains has been encouraging and, combined with continued momentum in adding new projects, puts us on track for the first of our two medium-term goals,” he said. declared.

Godrej Properties is looking to launch 13 million square feet of residential projects in FY22.

Bengaluru-based Prestige Estates Projects is also looking to increase its market share by 50-100% in its main market of Bengaluru over the next three to four years, its chairman and managing director Irfan Razack said. The company aims to have sales bookings of Rs 10,000 crore by FY25 or even earlier, Razack added.

According to Prestige management, residential launches of 12 to 15 million square feet have been planned between September 2021 and March 2022 in South India, NCR (Delhi) and Mumbai.

Ratings firm ICRA, in a recent report, said homebuyers looked at completed inventory and developers with a track record of on-time, quality project completion. This led to an increase in market share for the top nine listed real estate players, from 9% of sales in FY17 to over 16% in FY21.

Anuj Puri, President of Anarock Property Consultants, said that amid demonetization, the Real Estate Regulatory Authority and the Goods and Services Tax (GST) regime, consolidation within the real estate sector was on the rise. It has seen an increase in the dominance of organized and branded players.

“The Covid-19 pandemic has only accelerated this wave of consolidation with financially strong and organized developers gaining more market share. Buyer preferences have also boosted the supply and sales share of these actors,” he said.

According to Anarock, of the total sales of approximately 2.03 lakh units in the top seven cities in FY2017, the share of the top eight listed players was 6% and that of the top unlisted players was 11%. . About 83% of the shares were unorganized players.

In FY21, of the total number of units sold (about 1.58 lakh units), the share of top 8 listed developers was 22%, the share of top unlisted players was 18% while that of the others was only 60%.

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