Developer in Numbers Shrink by Nearly 53 Percent Pan India PropEquity

Developer in Numbers Shrink by Nearly 53 Percent Pan India PropEquity

On 25 Dec , 2019 11:51 PM

Developer in Numbers Shrink by Nearly 53% Pan India: PropEquity

 

 

July 02, New Delhi:At an all India level there has been a massive developer consolidation with nearly 53% of the total developers that existed in 2011-12 leaving the market by 2017-18, according to PropEquity Research.

 

Consolidation of developers in Gurugram, Noida, and Chennai has been to the tune of 70% respectively since 2011 to date. A considerable reduction in total number of developers by more than 65% was also witnessed in Kolkata and Bengaluru in the last 6 years respectively. The total no of projects launched across the cities also declined substantially during the same time period.

 

As a result of this consolidation the projects share of the top 10 developers has increased across the cities during the time period 2011 to 2018.

 

The total number of projects launched by top ten developers in Gurgaon and Noida today stands at 55% and 78% respectively while in 2011 it was 28% and 52% respectively. This clearly indicates that Noida and Gurugram have witnessed an increase of 27% in number of projects being launched by top ten developers since 2011.

 

Total No. of Developers

City

2011-12

2017-18

% Change

Mumbai

364

248

-31.9

Pune

658

531

-19.3

Thane

680

355

-47.8

Bengaluru

646

251

-61.1

Chennai

445

101

-77.3

Hyderabad

387

146

-62.3

Kolkata

235

83

-64.7

Gurugram

82

19

-76.8

Noida

41

11

-73.2

Pan India

5692

2670

-53.1

 

This numeric strongly endorses the trend that top developers have replaced the smaller players in the market.

 

“Consumers are now looking for the 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”, Mr. Samir Jasuja, founder and managing director at PropEquity said.

 

Financial distress of small developers, lack of execution capability, oversupply of inventory, GST, Demonetization, excessive land banking, lack of understanding of the demand supply dynamics, unjustified price appreciation, lack of social and physical infrastructure in emerging markets are all distress creating factors but when they occur together, it is the perfect storm.

 

Interestingly this 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 especially in Tier 1 cities and most specifically in NCR.

 

“Today the effects of this perfect storm have led to the consolidation of developer numbers across India. The unorganized 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,” Mr. Jasuja added.

 

As a result, only the credible developers who can deliver effectively on the regulatory requirements have emerged as the true beneficiaries.  This in turn benefits the buyer’s immensely as now they are assured of a quality product within stipulated timelines hence making their purchase decision a risk-averse one.

 

Most of the unorganized developers have failed to deliver on execution due to lack of inherent financial stability and the consequent liquidity crunch. These small-scale developers did not have the financial strength to adapt to the new system and practices.

 

Therefore, most of the small-scale developers either exited the market or joined hands with larger developers. This impact of the developer consolidation has been witnessed across the country and nothing can spell it our louder than numbers.

 

Implementation of RERA after the initial turbulence, is leading to the transformation of the industry for the better. The regulatory and tax reforms are providing power to the real estate sector and are instrumental in reviving buyer confidence and driving momentum into the residential real estate market. While in the short term these reforms caused a slowdown in the market, the scenario is certainly improving with time.

 

The year 2018 witnessed a positive trend in the market and this trend is likely to continue in the forthcoming years. The movement towards creating an efficient and transparent property market has made India an attractive destination for global and Indian investors and will certainly augment the demand for organized real estate.

 

 

About PropEquity:

P.E. Analytics owns and operates PropEquity which is an online subscription based real estate data and analytics platform covering over 1.10,124 projects of 30,597 developers across over 42 cities in India. We add approximately 300 projects every month. It is a premier Business Intelligence product- a first of its kind in India in the Realty space.

Author Bio PRintel Advisory