Good news for homebuyers! Finally, branded real estate developers beat non-branded entities

An integral part of Indian residential real estate’s coming-of-age process is the rise of branded developers, who are outpacing their non-branded competition in overall housing launches. Reformatory changes led by demonetisation and RERA have spearheaded this movement, say industry insiders. In January to June 2019 period, out of the total new supply in H1 2019 near 1,39,480 units in the top 7 cities i.e. over 53 per cent (73,930 units) was launched by branded developers, and 47 per cent by non-branded entities. Here branded developers mean listed developers, players actively operating for 10 years or more, newly-formed entities of large conglomerates, and players with sizeable areas under development either locally or pan-India.

Speaking on the reason for zoom in branded real estate developers Santhosh Kumar, Vice Chairman – ANAROCK Property Consultants said, "The aftermath of DeMo was first felt in H2 2016 itself. In H1 2016, the ratio between the supply of branded vs non-branded changed from 40:60 to 46:54 in the H2 2016 – the DeMO period. Thereafter, the change has been significant with supply from branded players overtaking that of non-branded ones." Kumar went on to add that in H1 2018, as many as 87,580 units were launched across the top 7 cities. Out of this total, nearly 52 per cent (comprising approx. 45,540 units) was launched by branded developers while the remaining 48 per cent (42,040 units) were by the non-branded players. With the share of branded players increasing to 53 per cent in H1 2019, the writing is clearly on the wall.

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Speaking on the housing supply in January to June 2019 period Kumar said, "Our research indicates that out of the total new supply in H1 2019 is around 1,39,480 units in the top 7 cities i.e. over 53 per cent (73,930 units) were launched by branded developers, and 47 per cent by non-branded entities. In H1 2018, branded developers’ share was 52 per cent and during H1 2016 - before DeMo and RERA - non-branded developers had a 60 per cent share (approx 95,600 units) of the total of 1,59,090 newly-launched units in the top 7 cities. Branded developers accounted for 63,490 units (40 per cent) of the total supply in the period.

Spelling reason for such gap between the branded and non-branded real estate developers Rakesh Yadav, CMD, Antriksh India Group said, "Liquidity crisis is one of the major reasons for the rising gap between the housing supply by branded and non-branded developers. Now, credit flow is available to only those developers who fulfill each and every norms of RERA. In the era or RERA, non-branded real estate developers are not able to meet the standards required by a lending institution to grant credit line. However, it's good from the homebuyer's perspective as branded developers are concerned about their face value, which they have developed into the market over the years. Hence, they would supply what they promise."