Saturday

16


November , 2019
Beating the slowdown
14:32 pm

Nikhil Raghavan


“The top nine real estate developers listed at the stock exchange have beaten the housing sector’s downturn blues. Their FY 19 data reveals that they not only successfully weathered the slowdown period of FY 2016-17 with a 159% jump in housing sales but also surpassed the marketʼs peak years of FY 2014-15 by 63%. The total sales value achieved by these players in FY 19 was approx. ` 228 billion,” informed Anuj Puri, Chairman, ANAROCK Property Consultants.

The top listed developers considered for analysing trends are DLF Ltd, Sobha Ltd, Puravankara Ltd, Prestige Estates, Brigade Enterprises Ltd, Mahindra Lifespace Developers Ltd, Godrej Properties Ltd, Oberoi Realty Ltd, and Kolte Patil developers.

ANAROCK research reveals that these companies together sold approxi-mately 44 million sq.ft. of housing in FY 2019 as against approximately 17 million square feet in FY 17 and 27 million square feet in FY 15. Their sales have collectively grown by 63% since the housing marketʼs peak years of FY 15. For instance, Godrej Properties sold over 8.5 million square feet of residential space in FY 19 as against 3 million square feet in FY 17, recording an almost three-fold jump in two years. When residential sales were at their peak levels in FY 15, Godrej Properties saw housing sales of approximately 3.6 million sq. ft.

According to Puri, “The housing space sold by the nine listed firms in Q1 of FY 20 (Apr-Jun) was nearly 17.5 million square feet in a single quarter - slightly less than half of the total space sold in all four quarters of FY 19. While the data for the three quarters of this financial year is still underway, we can expect sales to be much higher.”

Supply dynamics

Puri added, “An analysis of the new launch data trends of these nine listed real estate developers reveals that their new housing supply has more than doubled in two years – from approximately 28 million square feet in FY 17 to approximately 61 million square feet in FY 19. In the marketʼs peak year of FY 15, their new launches amounted to nearly 46 million square feet. This translates into a growth of 33% in FY 19 over FY 15.”

Reduced average realisation

With the increasing demand for affordable and mid-segment homes pulling even leading developers into the fray, the average realisation of property prices of some players has also reduced since FY 17. According to Puri, “For instance, the average price realisation for Kolte Patil developers dropped from ` 5,836 per square feet in FY 17 to ` 5,372 per square feet in FY 19. Likewise, Prestige Estates also saw their average price realisation drop from ` 6,441 per square feet in FY 17 to ` 6,218 per square feet in FY 19.”

Builders trimming debt burden

Many developers who incurred massive debts during the sectorʼs boom period are now looking to reduce their debt burden with rebooted business strategies. They are either selling their assets or their development rights, refinancing loans or speeding up project completions to improve sales.

While many players continue to struggle, the top nine listed firms collectively reduced their debt burden by 8% in FY 19 as against FY 17. The collective debt of these nine listed firms has reduced from ` 19,123 crore in FY 17 to ` 17,508 crore as on FY 19.

Prominent takeaways

The overwhelming preference for branded products now transcends electronics and fashion and extends to the homes they buy. The ongoing issue of stalled and delayed housing projects is increasingly driving homebuyers to listed real estate developers to mitigate risks.

Puri concludes, “Even the top developers have now recalibrated their project offerings. Their previous hard focus on the premium segments has given way to a greater emphasis on the high-demand affordable and mid-income segments. With more and more listed developers venturing into lower budget segments, the housing marketʼs demand-supply gap has narrowed significantly.”

 

Add new comment

Filtered HTML

  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <blockquote> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.