Goliaths of India Property Rise as Slowdown Swallows Small Firms
Market share of top 10 listed realty developers increased to 15% in the first half of 2019.
(Bloomberg) -- Indian home buyers are flocking to the nation’s well-funded publicly traded developers as risks of stalled and delayed housing projects mount at smaller players in the industry.
While overall home sales remain weak, India’s top nine listed real estate companies saw sales jump 159% in the year ended March from 2017, when the slowdown began, Anarock Property Consultants said in a report this month. These developers also reduced their debt by a total 8% during the period while competitors struggled to survive.
The revival is seen in the stock market, where the S&P BSE Realty Index has surged 21% this year -- three times as much as the broad BSE 500 Index -- and is set for its biggest annual gain since 2017. The property gauge is also the best performer among 19 sectoral sub-indexes compiled by BSE Ltd.
Compare this performance with India’s broader real estate industry, where as many as 500 firms face bankruptcy and Citigroup Inc. estimates as much as 800 billion rupees ($11 billion) of debt is locked within incomplete projects. A credit crunch is feeding into -- and worsened by -- an economic slowdown that’s hitting Indians’ demand for goods and services.
Home buyers are going to listed companies to mitigate the risk of their apartment building being left unfinished, Anarock Chairman Anuj Puri said.
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While the government plans to set up a 250 billion-rupee fund to salvage stalled residential projects, it is estimated to only be sufficient to salvage some 6% of constructions that are running behind schedule.
To contact the reporter on this story: Dhwani Pandya in Mumbai at dpandya11@bloomberg.net
To contact the editors responsible for this story: Jeanette Rodrigues at jrodrigues26@bloomberg.net, Ravil Shirodkar
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