INSUBCONTINENT EXCLUSIVE:
MUMBAI: Amid rising debt levels across Indian residential real estate sector, major listed realty developers have remained cautious on debt
and have focused on inventory liquidation to reduce leverage.
While the overall debt exposure to the real estate sector witnessed a 38 per
cent increase since 2016-17, debt levels for major realty players of the sample set declined by 25 per cent over the same period, according
to ratings agency ICRA.
Over the last few years, the availability of usual customer advances to fund real estate projects during the
construction stage has reduced owing to slowdown in sales and collection levels combined with RERA implementation and increasing buyer
preference for ready-to-move apartments
construction costs through internal accruals has permitted them to keep debt at sustainable levels
Further, listed players, with a good operational track record and sound financial discipline have been able to raise equity from the capital
for completed inventory from recognized developers, has enabled them to maintain a steady execution pace and resulted in significant gains
DLF, in particular, recorded a substantial decline, on the back of its secondary capital market equity transaction with GIC, which supported
the overall down-trend for these players, the ratings agency said.
The focus of these developers on creation of capital through inventory
liquidation and capital market equity transactions, instead of raising debt, has supported this trend in de-leveraging
Larger players like Godrej Properties and DLF have raised funds to the tune of around Rs 15,000 crore through capital market equity
transactions since March 2017.
Inventory liquidation has been supported by the robust sales levels for such players, with the area sold for
The on-year growth in sales volumes, albeit lower than the high levels witnessed over the past two years, remained healthy at 12 per cent ,
despite prevailing headwinds in the form of continued funding challenges owing to the NBFC slow down, and overall weakness in demand.
The
pace of execution also remained strong during the period, with launches of 7.35 million sq ft and deliveries of 14.49 million sq ft,
notwithstanding the on-year decline in deliveries