Sustained housing sales helps improve developers’ liquidity, credit profile
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 helped strengthen 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 Rs 13,000-14,000 crore in 2022-23 from Rs 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 about 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 Estates, Puravankara, Sunteck Realty and Sobha is estimated to have declined over 42% since the start of pandemic in 2019-20. These companies have repaid debt worth Rs 18,000-20,000 crore during this period
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