Listed developers commanding real estate market in India

Evaluating the real estate companies in India is a challenging task as all large and listed real estate developers are performing well. All are witnessing their best-ever fiscal topline and stock performances. The combined market share, fiscal performance and market cap of some 20 listed real estate companies will be more than half the revenue generated by the Indian real estate sector. 

Real estate, often referred to as localised business, has taken a tectonic shift recently as large and listed players have acceptance beyond their core geographies. The fiscal year 2023-24 has been the defining moment for big brands in India. 

Some quick facts 

• Nearly all the leading national brands are listed.
• The market share of national brands is more than 50%.
• Nearly all the leading brands have witnessed their best-ever fiscal performance in 2023-24.
• Stock performance of large and listed players is in sync with their fiscal topline.
• Nearly all large and listed players have ventured out of their core geographies in fiscal year 2023-24.
• National brands have been commanding premium value in the range of 12%-20%.
• Sale ratios of large and listed players are higher than others.
• Client acquisition cost of large and listed players is the lowest.
• National brands have been attracting quality funds at competitive rates.

Source: Track2Realty BrandXReport 2023-24

The question arises what differentiates the standing of large and listed players in the market. If they are at the peak of their business, how are they competing against each other in micro markets? More importantly, how would a buyer evaluate their brand rankings and market presence to understand the premiums they are commanding? 

The answer lies in consumer connection. Consumer touch points are sensitive zones for real estate companies. Here, most of the corporate strategies fail. Even the well-intentioned corporate conglomerates, otherwise respectable brands, wonder why their overall brand appeal doesn’t get translated into business.  

Industry views

Abhishek Kapoor, Group CEO, Puravankara Limited, pointed out that the consolidation within the real estate sector has benefitted large developers. With strict regulations under RERA (Real Estate Regulatory Authority), only credible players with robust financials and compliance capabilities have thrived, thereby increasing market share and trust among buyers. The shift towards branded developers who can assure on-time project delivery and international quality has also been significant. The fiscal topline and better stock performance reflect this market consolidation and confidence in listed developers.

“Expansion beyond core geographies presents both opportunities and risks. The situation during the market slowdown has taught lessons, like the need for market research and due diligence; phased development; partnerships and joint ventures; diversified portfolio; organizational structure; operational efficiency; cost management; brand trust; and customer service. By leveraging these strategies, large developers are better equipped to manage the complexities of expansion into new territories, capitalizing on growth opportunities while mitigating potential risks,” added Kapoor.

The question is whether the sector in its collective consciousness is mindful of the ground realities. 

Other questions that need answers are about expansion beyond core geographies that had hit many large developers during the slowdown. Now that they are again expanding their geographical footprints, what are the lessons learnt and what is the hedge strategy? Moreover, can a handful of large and listed players serve the pan-India housing demand?

Vimal Nadar, Senior Director and Head, Research at Colliers India, said although the leading national developers have been expanding to Tier-II and Tier-III cities, regional and local developers are uniquely positioned in catering to end-user preferences in these growing real estate hotspots. Moreover, with demand-supply gap persisting across all housing categories and markets, it is imperative that national, regional, and local real estate developers continue to co-exist, strengthening their core competencies and product offerings. 

“With leading real estate developers expanding their geographical footprints beyond Tier-I cities, one must be constantly aware of local end-user preferences and curate their product offerings in line with real estate trends in these small cities. Size of individual houses/units in apartments, floor plans, amenities on offer and pricing strategy should be devised keeping in mind the purchasing power of local communities in catchment areas of residential projects. Moreover, rather than an all-out expansion strategy, future portfolio diversification should be carefully planned based on pilot projects,” added Nadar.

Public perception

A pan-India survey by Track2Realty BrandXReport 2023-24 finds that the large and listed developers are being driven by the trust factor. Meanwhile, there is a lack of trust with small developers with no brand reputation. Most of these buyers believe that the legacy brands that are mostly, but not limited to large and listed ones have better consumer connection and processes.  

“My property purchase in Gurugram from a local builder was a nightmare. All sweet talks turned into ugly ones when I made the initial payment. There was delay in possession, changes in the specifications and amenities. I was forced to sign an unfair contract. Poor maintenance was another issue. I had no choice but to dispose of the property. This time I bought from a reputed builder with a sizable market cap and reputation. Yes, I had to pay the premium, but it is worth it,” said Naveen Jaiswal, an engineer.   

Is it all about big brands?

The question arises whether the success of large and listed real estate developers commanding consumer goodwill is a threat to regional developers with limited footprints. Empirical evidence doesn’t seem to support this argument. Many of the regional brands, often non-listed, are a threat for big brands.    

The other side of brands with limited footprints

• Ambuja Neotia is a giant in Kolkata
• Panchshil Realty is a giant in Pune
• County Group is a giant in Noida

The success of these regional brands answers the critical question as to whether there is an ecosystem issue for brands to perform. After all, most of the top companies are from Bengaluru and Mumbai. But these regional brands in not-so-conducive markets, like Noida, prove that the consumer-centric brands have high C-SAT (Consumer Satisfaction) score, irrespective of the ecosystem.

–The author is the chief executive officer at Track2Realty.