Big Real Estate Developers Stand Out Amid Liquidity Gloom

Developers expect sentiment to improve in the ongoing financial year.

Cranes rise above a construction site in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)
Cranes rise above a construction site in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Even as India’s developers were hoping for revival from a prolonged slowdown, a cash crunch aggravated the slump last year. But for bigger builders, that’s not a worry.

Most large publicly listed developers reported a revenue growth in the quarter ended March. While that was driven by new accounting provisions, the number of units sold and sales value also jumped to its highest in at least five quarters, suggesting a revival in demand.

That comes when developers are finding it tough to raise money, leading to a consolidation in the industry. Non-bank lenders, their biggest source of cash, face a credit crunch as borrowing costs rose after the surprise defaults of AAA-rated infrastructure conglomerate IL&FS. It worsened the slump triggered by Prime Minister Narendra Modi’s November 2016 move to scrap 86 percent of the currency overnight and a stricter housing law.

“Stress in levels of demand still continues and a revival has happened in the affordable segment,” Shishir Baijal, chairman and managing director at property consultant Knight Frank, said. The luxury and premium segments in Mumbai, the National Capital Region and Pune—the largest real estate markets in India—are yet to pick up, he said. “There is a need to kick-start a stimulation in demand for a total revival.”

Anuj Puri, chairman at property consultant Anarock, is optimistic. “It’s a flight to quality,” he said, referring to consolidation amid liquidity crunch. “Good developers are doing well, while average developers are doing badly.”

An Anarock survey found that time taken to sell housing inventory across seven metros fell to 30 months as of March, the lowest in the last two years. That suggests homebuyers are returning to the market, taking advantage of favourable property prices, a lower GST rate and cheaper home loan rates, it said.

Investors are betting on growth. Shares of most real estate developers have jumped since September despite the liquidity crunch till election uncertainty led to a pullback. And Nifty Realty is the best performing index so far this year with more than 22 percent gains. Prime Minister Narendra Modi’s return to power has further driven expectations as his focus on housing and infrastructure would help developers.

Big Real Estate Developers Stand Out Amid Liquidity Gloom

Fourth-quarter numbers justify the optimism. While revenue rose because of an accounting boost, the number of units sold and sales value jumped.

Godrej Properties

Six new launches aided Godrej Properties’ operational performance. The developer sold almost 2,900 homes in the quarter ended March, according to its filings. The area sold rose 2.5 times to 3.7 million square feet and booking value crossed Rs 2,100 crore.


The Bangalore-based developer reported the highest pre-sales at 1.13 million square feet worth Rs 920.5 crore in the fourth quarter. That, the company said in a statement, was buoyed by launches in the affordable segment, especially in Bangalore.

Brigade Enterprises

Volumes rose to 0.96 million square feet, the highest in at least five quarters. The management said in a conference call that margins expanded by more than 10 percentage points for the hospitality and the leasing segment to 22 percent to 36 percent.

Prestige Estates

Both area sold and sales value were the highest in at least five quarters at 2.43 million square feet and Rs 1,372.6 crore, respectively. Its margin expanded to 25 percent because of lower management expenses for its commercial properties.

Oberoi Realty

After adjusting for the benefit of Ind AS 115, revenue jumped 30 percent because of higher bookings for its project in Borivali, Mumbai and better sales at Oberoi Esquire in Goregaon, Mumbai.


DLF Ltd.’s revenue rose 82 percent because of Ind AS 115 boost to Rs 1,832 crore. Its rental portfolio grew on stable occupancy levels, ICICI Direct Research said in a note. But the company is still restructuring its debt.

The management said in an analyst conference that its Rs 3,170 crore qualified institutional placement and rental portfolio led to better cash flows. DLF became a key beneficiary in the consolidation of the industry, it said.

Indiabulls Real Estate’s revenue fell 10 percent to Rs 1,822 crore. The company is yet to disclose quarterly sales details.


Developers expect sentiment to improve in the ongoing financial year.

Higher sales in Bangalore will lead to double-digit operational growth, JC Sharma, managing director at Sobha, told BloombergQuint in an interview.

Venkat Narayana, chief financial officer at Prestige Estates, said the revival is seen in the mid-income realty projects with good demand in Bangalore and Hyderabad. The organised players, he said, are gaining from supply consolidation.

Godrej Properties is seeing traction in the affordable and mid-income housing segment. Pirojsha Godrej, executive chairman at the company, said the developer has a robust launch portfolio for 2019-20. Stressed assets and liquidity crunch will provide opportunity for consolidation, she said.