Organised realty players better positioned to tackle Covid-19: ICRA

July 28, 2020

Large realty players with established market positions, strong balance sheets and adequate liquidity have weathered the storm better than smaller players, who have been finding it difficult to cope with the prevailing market conditions, as per ICRA.

The agency expects the already ongoing consolidation of the sector to accelerate further, with larger, more established players gaining increased market share.

Mahi Agarwal, assistant vice president and associate head of the agency, said, “Homebuyers had already been leaning towards developers with an established track record of on-time and quality project completion, which had resulted in large, listed players reporting healthy sales and collections between April-December FY2020, despite the prevailing liquidity crisis and unfavourable supply-demand dynamics.

The ongoing economic uncertainties have led to reduced discretionary demand from home-buyers, and also resulted in an increased focus on conserving liquidity, leading to deferment of new purchases and delays in meeting payment demands raised by developers in recent months.

Although certain developers with adequate project portfolio flexibility have responded to the slow-down by making payment structures more attractive and offering sales schemes in order to offload unsold inventory, a significant reduction in the overall sales traction remains likely.

Cancellations are also expected to increase, especially for more recently launched projects with lower customer advance build-up.

The players who are able to weather this storm are likely to focus on phase-wise launches going forward, with de-densification of housing projects becoming a key part of project plans,” added Agarwal.

According to ICRA, sales saw a dip of 11 per cent year-on-year in Q4 FY20. This decline remained significantly lower than the 30-40% year-on-year reduction witnessed in sales across key markets at an overall industry level.

It notes that with the longer period of disruption in Q1 FY2021 however, sales and collections metrics are likely to show a higher impact relative to Q4 FY2020, both for listed players, as well as for the industry as a whole.

Thus, overall operating cash flows for most developers, including the listed players, are expected to witness significant moderation in the current year, resulting in increased reliance on available liquidity and/or refinancing to meet committed outflows.

The larger, organized players have, however, maintained considerable liquidity buffers, mostly in the form of free cash/liquid balances and undrawn bank lines, which can be used to meet debt obligations, despite a reduction in collections and operating cash flows, although the undrawn bank lines may have some conditions associated with disbursement.


  1. Tom Wilson
    February 28, 2020

    Beautiful home, very picturesque and close to everything in jtree! A little warm for a hot weekend, but would love to come back during the cooler seasons!

  2. Ali Tufan
    February 28, 2020

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