Consolidation in Real Estate emerges are a growing trend

The real estate industry is witnessing a new wave of consolidation, as several large and listed companies look towards it as a means to improve liquidity and revenue generation. The current market demands reflect the homebuyers sentiment and frustration with regard to delayed deliveries and a lack of trust with new entities. By taking over smaller companies, larger entities are being able to stabilize bond yields and ensure timely delivery on account of improved liquidity.

In a recent interview with a major publication, Chairman of Sunteck Realty, Mr Kamal Khetan, commented on the industry’s current transformation. He believes rapid changes in the corporate environment will require all stakeholders to sit up and take notice. He believes companies must respond quickly and make necessary adjustments. Through a collaborative development agreement, Sunteck most recently purchased a 7.5-acre land piece in Mira Road’s Beverly Park locality. The project's potential for growth and revenue is pegged at 2.5 million square feet of built-up space and Rs. 3000 billion, respectively. With projects in Borivali, Vasai, Shahad-Kalyan, Vasind, and Pen-Khopoli, it has secured the most square footage of any developer, totaling 25.5 million square feet.

According to Abhishek Lodha, MD, and CEO of the Lodha Group, "the real estate business is undergoing consolidation both at the demand and supply end." "We have signed collaborative development agreements for 14 new land parcels between March 2021 and June 2022, and the total development potential is approximately 14 million square feet, or over Rs 21000 crore." Home purchasers are eager to transact with reputable developers that have a track record of success and can be relied upon for high-quality and on-time delivery, he claims.

Along with Lodha and Sunteck, other companies leading the consolidation drive include Godrej Properties, Prestige Estates Projects, and Oberoi Realty. These companies have made a number of outright acquisitions, formed joint ventures, and signed development management agreements.

According to leading research houses and rating agencies in the country, the YoY growth potential for formalised Grade A builders is likely to be up to 15% in FY 23, as this trend gains momentum whereas the future does not look as bright for builders that don’t make the grade cut. Grade A builders will dominate the market as the industry veers towards formalisation as a result of regulatory reforms and industry consolidation. Top real estate players, capable of jumping upon this bandwagon can hope to increase their revenues through joint ventures, collaborations and other such means to synergise sales, liquidity and growth.

Next (Maharashtrian locals may no longer need CRZ nod for houses along the coast)

Consolidation in Real Estate emerges are a growing trend

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