Anarock’s Anuj Puri Sees Any Real Estate Crisis In India As Developer-Specific

A liquidity crunch among India’s non-banking financial companies and slow sales in residential properties could lead to a crisis in some of India’s real estate pockets. But this crisis is likely to be developer-specific, according to Anuj Puri, chairman of Anarock Property Consultants Pvt. Ltd.

“I have no doubt that there will be a section within the community of developers and stakeholders within certain markets where we will see this grim situation where the projects are now going to get stalled because of lack of liquidity,” Puri told BloombergQuint in an interview.

These are the developers who received 40-50 percent of the funds from NBFCs and completed half of their projects, according to Puri. As the financiers are now unable to fund the remaining half, some could tie up with bigger developers to finish these projects. Developers who fail to do that, will have stalled projects, he said.

Another stress point is the sales of compact affordable housing apartments, Puri said. While they sell well on paper due to smaller ticket price, they don’t sell once buyers physically see the space. “The reason is perhaps they are so tight and so compressed and perhaps to an extent, inhabitable,” he said.

Apartment sizes have fallen between 7 percent and 27 percent across cities, according to the property consultant. Developers who are unable to come up with good plans and layouts are likely to suffer, Puri said.

But some developers—mostly India’s listed real estate companies—are benefitting from this situation, he said. Buyers who prefer quality are choosing better developers with good corporate governance, lesser leverage and those who are demonstrating construction on their sites, Puri said. “As a result, their sales are doubling and they are growing.”

Watch the full conversation here: