MOSL: REAL ESTATE-REALiTY CHECK-Opportunity In Adversity-Listed players gain market share with declining debt
REAL ESTATE: REALiTY CHECK: Opportunity In Adversity; Listed players gain market share with declining debt
The Indian real estate sector undeniably has been facing strong headwinds from liquidity crisis on one side and delivery pressure under the Real Estate Regulatory Act (RERA) on the other. However, we note that some encouraging trends are possibly being ignored amid the pessimism prevailing in the sector. A finer look at the data points reveals that players exercising financial discipline and having access to customers are outshining others with an all-round performance. Moreover, it is comforting to see the country’s real estate sector paving way for greater institutionalization and entry of some of large corporate houses.
Top players gaining market share; consolidation – a key theme
Not very long ago, the country’s realty sector was marred by indiscipline, with housing projects getting delayed and unsold inventory piling up. Thus, the government stepped in with some key reforms like the RERA and the GST, pinning hopes of a revival in the real estate sector. We, too, have observed emergence of some interesting trends that foster a sense of optimism in an era of pessimism.
- Over CY16-18, the top 10 players have witnessed massive market share gains in the key markets of Bengaluru/NCR/Chennai (+8%/+14%/+13%) and also in Hyderabad/Pune (+2%/+4%).
- Top players did not witness market share gains (by volume) in the Mumbai Metropolitan Region (MMR). However, we believe that this is optically distorted due to a wide variation in the price spectrum (high-value, low-volume for MMR). We, thus, believe that market share gains for the top players in MMR are likely to be similar to those in Bengaluru and NCR.
- The number of companies ‘consistently’ featuring in the top-10 list has been low and varied over the past three years. This indicates that the industry is in the consolidation phase.
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