Major listed developers continue their winning streak as homebuyers’ preferences increasingly favor them. Listed players now have their sights formed on Tier 2 and Tier 3 cities – for example, Puravankara Ltd. and Sobha Ltd., based in Bengaluru, will expand to Kochi, Coimbatore, GIFT City, Hosur, Thrissur and Thiruvananthapuram. South India is an area of major interest for these actors.
The listed developers considered are Brigade Enterprises, Godrej Properties, Kolte-Patil, Mahindra Lifespace Developers, Prestige Estates, Puravankara Ltd and Sobha Ltd.
Data from the financial presentations of the 7 largest listed real estate companies reveal that they are preparing to launch approx. 92.5 million square feet of new residential space within 1 to 2 years. Along with the top 7 cities, they’re also focusing on those big Tier 2 and 3 cities – and at least 70-75% of that offering could launch in FY 2022 itself.
The corresponding financial presentation data of these listed developers for previous years indicates a steady annual growth in new launches. Despite COVID-19 in fiscal year 2021, the total number of new launches by these top 7 listed players increased 11% from the previous fiscal year – by approximately. 28.3 mn ft² in FY2020 at approx. 31.37 mn square feet in FY2021.
The current expansion pipeline of approx. 92.5 million square feet is a clear indication that strong listed developers will continue to dominate the new residential supply and accelerate their market share gain.
“COVID-19 has resulted in high latent demand in Tier 2 and 3 cities,” says Anuj Puri, president of ANAROCK Property Consultants. “This demand is driven by improved economic growth, infrastructure developments, lower cost of living and more attractive property prices in these cities. However, it is the new dynamic of working from home that has worked the most in their favor, as they continue to attract migrant professionals using the FMH option.
The days when the residential offer of these cities was dominated by local players will soon be over. The demand is also pursuing the projects of the main developers, so their expansion into Tier 2 and Tier 3 cities is a given.
“These players have extremely ambitious expansion plans for the next two years,” says Puri. “Even though 70% of their new projected total supply of approx. 92.5 million. square feet is launched in fiscal year 2022, they will have doubled their footprint compared to the previous fiscal year 2021, when they launched approx. 31.37 Mn of residential space.
The strong home sales by the top 7 listed real estate players over the past years have been a huge confidence boost for them. The data indicates that these listed players sold in total approx. 32.61 million square feet of housing in fiscal 2021 despite the pandemic – a 7% increase from fiscal 2020, when approx. 30.45 Mn of surface area were sold.
The direction of housing demand after the onset of the pandemic is now guiding their next steps – Tier 2 and Tier 3 cities are definitely new growth neighborhoods to explore.
The author of this article is Anuj Puri, President – ANAROCK Property Consultants
The views and opinions expressed do not belong to IIFL Securities, indiainfoline.com