Indian real estate companies have raised over ₹1 lakh crore in the past 20 months, primarily through debt issuances, driven by a housing sector boom and steady cash flows. An additional ₹28,350 crore in issuances is expected soon, according to data from Prime Database.
Debt Dominates Fundraising
In 2023 and 2024 (year-to-date), real estate companies raised ₹95,975 crore through debt, with ₹61,600 crore collected in 2023 and ₹34,375 crore this year. While equity issuances were limited, they increased significantly in 2024, with ₹8,772 crore raised compared to ₹124 crore in 2023.
Of the upcoming ₹28,350 crore issuances, ₹16,635 crore will come from debt, ₹9,695 crore through Qualified Institutional Placements (QIPs), and the remainder from IPOs.
Rising Sales and Predictable Cash Flows
Sales by listed real estate companies have grown 15-20% post-pandemic, enhancing cash flow predictability. “Developers receive payments on a milestone basis, which improves cash flows,” said Vijay Agrawal, Managing Director at Equirus. This predictability has enabled companies to secure debt at lower costs.
While equity issuances have risen, debt remains the preferred option due to its lower cost, with interest rates around 10-12%.
Focus on Land Acquisition and Growth
A significant portion of funds raised is being allocated for land acquisitions to support new projects. The first half of 2024 saw 54 land deals covering over 1,000 acres, while 2023 recorded nearly 100 deals for over 2,700 acres, according to Anarock.
Larger players are acquiring projects or land from smaller entities to expand their portfolios, while real estate platforms with strategic investors are gaining traction.
Strong Sector Fundamentals
The sector showed strong fundamentals with average revenue growth of 15% in the March quarter and 13% in the June quarter, alongside net profit increases of 37% and 54%, respectively.
© 2023 Rera News. All rights reserved.