Real Estate

Real estate market consolidates with top developers replacing small players: PropEquity

Financial distress, regulatory compliances, oversupply of inventory is forcing unorganised and small real estate developers to either exit the market or join hands with large developers who have a positive track record and have demonstrated their execution capabilities. This has led to consolidation in the market, with more than half of the developers that were active in 2011-12 leaving the market in 2017-18, says a recent report.

Consolidation of developers in Gurugram, Noida and Chennai has been to the tune of 70 percent , respectively, since 2011 to date. A considerable reduction in total number of developers by more than 65 percent was also witnessed in Kolkata and Bengaluru in the last six years, respectively.

The total number of projects launched across the cities also declined substantially during the same period, says a report by PropEquity, an online subscription based real estate data and analytics platform owned and operated by P.E. Analytics.

As a result of the consolidation, the projects share of the top 10 developers has increased across cities from 2011 to 2018.

Total number of projects launched by the top 10 developers in Gurugram and Noida today stands at 55 percent and 78 percent, as against 28 percent and 52 percent in 2011, respectively. This clearly indicates that Noida and Gurugram have witnessed an increase of 27 percent in the number of projects being launched by top 10 developers since 2011, the report stated.

“Consumers are now looking for developers with excellent track records in terms of quality and execution. This will further refine the developer market based on their sustainability in terms of deliveries and fair practices,” says Samir Jasuja, founder and Managing Director at PropEquity.

The real estate storm started building way back in 2010. Maximum launches in India were witnessed during 2010 to 2013 leading to a situation of high supply and consequent absorption being largely led by investors. This illusion of demand led to more launches and a huge demand-supply mismatch was created, especially in Tier 1 cities and most specifically in NCR.

“Today the effects of this perfect storm has led to the consolidation of developer numbers across India. The unorganised players have been unable to cope with all these year-on-year mounting market issues, with the final impact of RERA that insists on regulatory compliances,” Jasuja adds.

[“source=moneycontrol”]