Realty Launches are slowing down across metros on slower sales, but organized developers have been gaining on sales and launches given little price differentiation now. It also offers the comfort on timely delivery.
The market share of Mumbai, Pune and Gurgaon have increased for large organized / branded developers while in Bangalore, though the top 10 are ahead in performance, market share has only marginally increased over the past few years.
In addition to the land owners / corporates selling land, small and large developers have also started to tie up with select large developers. Such a route is usually adopted to realize higher selling rates, get faster volumes and even upfront cash flows for those in stress. Mumbai has seen the most number of deals while in CY2016, there were more deals than in FY2004-15 put together.
Access to capital and cost of borrowing remain low for larger developers, and they are getting equity funding. Four large developers have seen equity commitments / investments of over `75 bn in CY2015, in addition to multiple small deals in the market.
Traditional developers have shifted from land banking to quick monetization approach since FY2010. Prestige Estates has out-performed all on land acquisitions. It has acquired the most land in the past five years, mostly through the asset light JDA route and monetized them within four-five quarters.
Among corporates, Godrej Properties (GPL) has gained the most, we believe. It has capitalized the most on its brand equity and strong construction focus. Although older acquisitions were capital intensive, most projects after FY2013 have better structures. GPL has also been adding (i) projects in Development Management (DM) model earning annuity-type income on project management and brand equity and (ii) refundable deposits in Joint Ventures, thus protecting against cost inflations.
