After the pandemic, Indian real estate developers have been aggressively tapping capital markets through Initial Public Offerings (IPOs) and Qualified Institutional Placements (QIPs), according to Anarock’s analysis of the available data trends of listed developers on the National Stock Exchange.
In total, Rs 75,923 crore has been raised via QIP across sectors.
Enhanced transparency, a robust post- pandemic residential real estate recovery, and strong investor confidence are factors driving a surge in activity, thereby positioning the sector for continued growth.
Qualified Institutional Placements allow publicly traded companies to raise capital by offering equities or securities convertible into equity to pre-approved institutional buyers.
This fundraising approach lets companies skip the more conventional Initial Public Offering (IPO) route and quickly raise substantial funds.”After renewable energy, real estate comes in second highest among sectors to raise funds through QIP so far this year. This strong QIP activity highlights the sector’s crucial role in India’s broader capital markets – and the institutional investors’ growing confidence in Indian real estate,” said Anuj Puri, chairman, Anarock group.The Nifty Realty Index has surged by nearly 250% between January 2021 and September 2024, making it the second-best performing sector index after the Nifty PSU Bank Index. This growth in the stock market reflects a broader confidence in the real estate sector and its ability to deliver long-term value.
Robust housing sales growth after the pandemic has prompted leading developers to unleash relevant inventory across markets.
As per Anarock data, over 13.62 lakh units have been launched across the top 7 cities between 2021 to 9M 2024.
Concurrently, housing sales in these cities have soared to approximately 14.36 lakh units in this period. Effervescent sales led to an over 10% decline in unsold housing inventory in this period, despite the high rate of supply addition.
“To fund their aggressive expansion, these developers are turning to IPOs and the QIP route. We expect investor participation to grow manifold in the coming years,” Puri said.
Simultaneously, the strong post-pandemic homebuyers demand has also prompted developers to raise funds via IPOs to fund new project launches across geographies.
Since 2021, six developers have collectively raised Rs 5,275 crore through mainstream IPOs. The developers who raised funds via IPOs since 2021 till date are Macrotech Developers Ltd, Shriram Properties, Keystone, Signature Global, Suraj Estate and Arkade Developers.
Post-2020, the real estate sector has rebounded strongly, with Grade A developers leading the charge. Market demand for high-quality residential projects has surged, and developers have been quick to capitalize on this with new project launches.
By September 2024, the inventory overhang reached its lowest at 14 months, demonstrating how quickly supply is being absorbed by the market.
In the first nine months of 2024 itself, residential sales value reached Rs 4.2 lakh crore – a 22.6% increase over the same period in 2023 and an impressive 115% growth over the total sales value recorded in 2021. This surge in sales value is directly boosting developers’ cash flow, allowing them to take on new projects and meet rising demand, further improving investor sentiment.