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Real Estate Sector Undergoes Major Consolidation

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Real Estate Sector Undergoes Major Consolidation

As a result of financial distress looming over the real estate sector for the past few years, real estate sector is witnessing consolidation

Small real estate developers and unorganised players are either preparing for an exit or are joining hands with large developers with proven records of execution capabilities. According to a recent report, the sector is witnessing major consolidation. More than half of the developers who were active in the market in the year 2011-12 left by the year 2017-18. 

Since 2011 till date, Gurugram, Noida and Chennai saw consolidation of developers to the tune of 70 percent respectively. Kolkata and Bengaluru also saw a reduction in the total number of developers by 65 percent. The last six years accounted for the major reduction.

A report by PropEquity states that the same period also witnessed a decline in the number of launches across the cities. PropEquity is an online subscription-based real estate data and analytics platform owned and operated by P.E Analytics.

However, the consolidation has resulted in an increase in the share of projects by the top 10 developers between 2011 and 2018. The top 10 developers’ share stood at 55 percent and 78 percent respectively in Gurugram and Noida. These figures suggest a sharp rise in the launches as compared to the 28 percent and 52 percent in 2011 in Gurugram and Noida respectively. 

Since 2011, the total number of projects launched by top 10 developers increased by 27 percent in Noida and Gurugram. Samir Jasuja, Founder and Managing Director at PropEquity said that the 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,

The Indian real estate sector experienced maximum launches during the period between 2010 and 2013. The supply during this period was significantly high and there was consequent absorption being largely led by investors. As a result of this illusion of demand, there were more launches which finally led to a demand-supply mismatch, especially in Tier 1 cities and most specifically in NCR.

Jasuja added that the effects of this perfect storm have 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 compliance.” 

Source: Moneycontrol

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