Track2Realty Exclusive-Yearly Analysis: DLF is raising funds by selling non-core assets, Godrej Properties raised funds through a QIP and HDIL is generating funds by selling transfer of development rights (TDR) and floor space index (FSI) — all to lighten the debt burden. Earlier, companies were building land banks and were rewarded for it in the stock market. Now, they are conserving cash to payback creditors.
Anil Sharma, CMD of Amrapali Group says biggest learning of the sector is that sector must be regulated in a self-regulatory manner. If you regulate yourself, you try to follow the rules and regulations yourself; at least you do not face huge problems. He, however, blames the eco system for the lack of regulation in the sector.
“Why do you think only the sector should be transparent? The entire eco system and regulatory environment has to be transparent. If I move table-to-table for 35 approvals, it is evident that nothing is transparent. But even in the given system the developers have changed themselves. We are ready for more improvements provided we are given a transparent system from the government side,” says Sharma.
Learning is nevertheless both painful as well as making the developers wiser. Asset light model that has worked well in many other industries is back with a bang in realty as well and can be termed as lesson number three. Developers are now keen to the partnership model — developing property jointly with the landowner. This, according to Anshuman Magazine, Chairman and Managing Director (South Asia), CB Richard Ellis, was always around.
However, during the boom period, ambitious developers started buying land and developing projects on their own. Now, partnerships are back. Godrej Properties, for example, trades at a premium valuation compared to other large multi-city developers due to its asset-light partnership model.
Led by Bangalore and Chennai, the South Indian realty market has probably taught what the rest of the other lucrative property market never believed in–position your projects as per the demand and don’t bank on investors and underwriters to bail you out. Realty prices in south Indian cities have remained relatively stable compared to Delhi and Mumbai and has taught the sector lesson number five.
The prices in these markets had not soared as much as markets like Delhi and Mumbai. Consequently, south India-based developers like Sobha Developers, Prestige Estates, Puravankara Projects performed better in the year 2012 compared to other companies such as DLF, HDIL and Godrej Properties. At a time when the BSE Realty Index shed around 15 per cent in the year 2012, many of these grounded developers were rather gainers.
