HomePress ReleaseEconomic Times: RERA Impact: Listed Firms Bag Bigger Pie of New Starts

Economic Times: RERA Impact: Listed Firms Bag Bigger Pie of New Starts

Real estate cos with good compliance gain market share, trend expected to continue.

India’s property industry leaderboard is finally beginning to mirror those in other sectors of the broader economy about a year after RERA became a reality. Larger organised players, which often found themselves being undercut by smaller rivals in the past, are garnering a greater share of business, and the trend should continue as more states perfect the implementation of the new law.

Data by real-estate analytics firm Propequity showed that the share of top 10 developers across seven cities, in fresh home starts and sales, has climbed significantly in the last one year.

“RERA has transformed the industry and listed companies are in a better position as we already have the governance processes in place, thus giving us a head-start,” said Vikas Oberoi, chairman of Oberoi Realty, a Mumbai-based realtor. “The larger developers with greater transparency offer more confidence to the buyers… Market shares gains will accelerate going forward.”

For the top 10, aggregate market share in the new launches across these seven cities almost doubled to 40% in FY18, from 24% in FY17 and 19% in FY16. The market share in sales for the three years for the top developers has increased from 19% in FY16 to 30% in FY18.

“Launches by branded builders have been increasing and so are sales. Branded builders have gained market share after RERA at the cost of the unorganised market,” said JC Sharma, vice chairman, Sobha Ltd.

Large NCR developers have seen the highest gain in share in launches — up 40% in FY18 from average launches in FY16 and FY17. This was followed by Hyderabad (up 29%), Chennai (up 27%), Mumbai (up 26%), and Bengaluru (up 23%) in that order. Kolkata is the only city that has seen a decline in the share of top developers. Analysts attribute this to a weak RERA implementation in West Bengal.

“RERA has helped both buyers and developers in many ways. Companies which already had a strong corporate governance and compliance system are benefiting from the renewed interest in the sector,” said a top official of a leading NCR-based listed company on the condition of anonymity as the realtor is under a silent period ahead of its quarterly earnings.

“With the introduction of RERA, customers are now more aware of what they are buying. The practice of having a good compliance system in place is now being translated into sales for such companies,” he said.

RERA has made it difficult for unorganised players, with the burden of compliance becoming increasingly onerous for smaller players.