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MOSL: EXPERT SPEAK (Real Estate)-Point of view-Large debt driving land monetization and increased supply

EXPERT SPEAK (Real Estate): Point of view: Large debt driving land monetization and increased supply; Liquidity crisis impacting larger developers disproportionately

 

Mr. Pankaj Kapoor, Founder and Managing Director – Liases Foras

Mr. Pankaj Kapoor has over 20 years of experience in the field of real estate research, valuation, consulting and rating. He is highly acclaimed for analyzing and predicting trends in the real estate market with precision. Kapoor founded Liases Foras, a non-brokerage real estate research outfit in 1998. His firm monitors the performance of over 20,000 projects across 60 cities in India and provides research and risk advisory to HFCs, Banks, Developers, Funds, and Government Institutions. He is also a member of the central advisory council of RERA.

 

We met Mr. Pankaj Kapoor, Founder and Managing Director of Liases Foras (LF), a non-broking real estate research company to gauge the state of the real estate industry, especially in light of the current liquidity crisis. Key highlights:

• Of the 11,000 developers tracked by LF, only 90 large players account for 36% of the debt. Total loans are at INR4T with yearly sales at INR2.5T. Thus, sales need to increase 2.5x to service debt and repayment.
• The liquidity crisis seems to have affected the larger developers disproportionately. Smaller developers appear to be fighting-fit, with their market share increasing.
• Despite the crisis, developers are forced to launch new projects to monetize land parcels; there are not many takers for the land.
• In the last 12 years, apartment prices have increased 4.5x, while land prices have appreciated 9x. The current liquidity crisis is a potential trigger for price correction in the real estate industry.