Listed real estate players beat slowdown, see housing sales worth Rs 22,800 crore in FY19

For instance, Godrej Properties sold over 8.5 mn sq. ft. of residential space in FY 19 as against 3 mn sq. ft. in FY 17, recording an almost three-fold jump in two years. When residential sales were at their peak levels in FY 15, Godrej Properties saw housing sales of approx. 3.6 mn sq. ft.

The housing space sold by the nine listed firms in Q1 of FY 20 (Apr-Jun) was nearly 17.5 mn sq. ft. in a single quarter — slightly less than half of the total space sold in all four quarters of FY 19. While the data for the three quarters of this financial year is still underway, we can expect sales to be much higher.

An analysis of the new launch data trends of these nine listed real estate developers reveals that their new housing supply has more than doubled in two years — from approx. 28 mn sq. ft. in FY 17 to approx. 61 mn sq. ft. in FY 19. In the market's peak year of FY 15, their new launches amounted to nearly 46 mn sq. ft. This translates into a growth of 33 percent in FY 19 over FY 15.

With the increasing demand for affordable and mid-segment homes pulling even leading developers into the fray, the average realisation of property prices of some players has also reduced since FY 17. For instance, the average price realisation for Kolte Patil developers dropped from Rs 5,836 per sq. ft. in FY 17 to Rs 5,372 per sq. ft. in FY 19. Likewise, Prestige Estates also saw their average price realisation drop from Rs 6,441 per sq. ft. in FY 17 to Rs 6,218 per sq. ft. in FY 19.

Many developers who incurred massive debts during the sector's boom period are now looking to reduce their debt burden with rebooted business strategies. They are either selling their assets or their development rights, refinancing loans or speeding up project completions to improve sales.

While many players continue to struggle, the top 9 listed firms collectively reduced their debt burden by 8 percent in FY 19 as against FY 17. The collective debt of these 9 listed firms has reduced from Rs 19,123 Crore in FY 17 to Rs 17,508 crore as on FY 19 (The total debt of each of these firms includes current and non-current debt as reported in their standalone financials).

Millennials’ preference for branded products now transcends electronics and fashion and extends to the homes they buy.

The ongoing issue of stalled and delayed housing projects drives homebuyers to listed real estate developers to mitigate risks.

Even the top developers have now recalibrated their project offerings. Their previous hard focus on the premium segments has given way to a greater emphasis on the high-demand affordable and mid-income segments. With more and more listed developers venturing into lower budget segments, the housing market's demand-supply gap has narrowed significantly.