Robust home sales improve realty companies' liquidity profile
property market over the last three financial years has resulted in robust improvement in liquidity and credit profile of key listed real estate developers since the outbreak of the Covid-19 pandemic. The buoyancy in residential demand in mid, premium and luxury segments across India's top property markets including Mumbai, Delhi-NCR, Bangalore, Pune, Kolkata, and Hyderabad has pushed both collections and realisations of these companies' higher.
The performance has helped in strengthening their leverage and credit profiles and this is expected to sustain over the medium term. «Liquidity profile including cash and bank balances for 11 listed developers has improved to around ₹13,000-14,000 crore in 2022-23 from ₹9,046 crore in 2019-20, despite the fact that large developers have deployed funds for land purchases during the last fiscal,» Gautam Shahi, director, CRISIL Ratings.
The sales of top 11 large and listed realty developers rose around 50% year-on-year in 2022-23 in value terms, while the area sold increased nearly 20%. The higher realisation per sq ft for these developers reflects the preference for bigger and premium homes.
«Sales momentum in the property market has been robust over the last couple of years owing to the underlying economic growth. Steady sales and higher conversions along with realisations have helped improve the liquidity that allows more economic activity and velocity.
This will lead to better execution and timely delivery that ultimately helps homebuyers,» said Jaxay Shah, CMD, Savvy Group. Gross debt of 11 listed large residential realty developers including Brigade Enterprises, DLF, Godrej Properties, Kolte-Patil Developers, Macrotech Developers, Mahindra Lifespace, Oberoi Realty, Prestige
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