Listed players to develop 92.5 mn sq ft of branded housing in top Tier 1, 2 & 3 cities over next 2 y
Spurred by improved economic growth, infrastructural developments, lower cost of living, attractive real estate prices, and work from home dynamic, demand for housing is rising in Tier 1, 2, 3 cities, which has forced the nation’s major and listed real estate developers to set their sights on these cities.
According to an ANAROCK study, listed players now have their crosshairs trained on tier 2 and 3 cities. For instance, Bengaluru-based Puravankara Ltd and Sobha Ltd will expand into Kochi, Coimbatore, GIFT City, Hosur, Thrissur and Thiruvananthapuram. Southern India is a major focus area for these players.
The listed developers considered are Brigade Enterprises, Godrej Properties, Kolte-Patil, Mahindra Lifespace Developers, Prestige Estates, Puravankara Ltd and Sobha Ltd.
Data from the financial presentations of the top 7 listed realty companies reveals that they are gearing up to launch close to 92.5 mn sq ft of new residential space within the next 1-2 years. Apart from the top 7 cities, they are also zeroing in on these major tiers 2 and 3 cities – and at least 70-75% of this supply may be launched in FY2022 itself.
These listed developers’ corresponding financial presentations data from previous financial years indicates a steady y-o-y growth in new launches. Despite COVID-19 in FY2021, the total new launches by these top 7 listed players rose by 11% against the preceding FY – from approx. 28.3 mn sq ft in FY2020 to approx 31.37 mn sq ft in FY2021.
The current expansion pipeline of approx. 92.5 mn sq ft clearly indicates that strong, listed developers will continue to dominate the new residential supply and accelerate their market share gain.
Commenting on the same, Anuj Puri, Chairman, ANAROCK Property Consultants, says, “COVID-19 has driven a lot of latent demand into tier 2 and 3 cities. This demand is driven by the improved economic growth, infrastructural developments, lower cost of living and more attractive real estate prices in these cities. However, it is the new work from home dynamic which has worked most strongly in their favour as they continue to attract migrant professionals riding on the WFH option.”
The days when these cities’ residential supply was dominated by local players will soon be over. Demand is also chasing projects by leading developers, so their expansion into tier 2 & tier 3 cities is a given.
“These players have extremely ambitious expansion plans for the next two years,” adds Puri. “Even if 70% of their total projected new supply of approx. 92.5 mn sq ft is launched in FY2022, they will have doubled their footprint as against the preceding financial year 2021, when they launched approx. 31.37 mn sq ft residential space.”
The robust housing sales by the top 7 listed real estate players in the previous financial years have been a huge confidence booster for them. Data indicates that these listed players cumulatively sold approx. 32.61 mn sq ft of housing in FY2021 despite the pandemic – an increase of 7% over FY2020, when approx. 30.45 mn sq ft area was sold.