“We are dependent on developer partners to exploit the opportunity but there are no meaningful developers in Mumbai. The Noida story is played out and Gurgaon (Gurugram) also has (only) a handful of developers,” he says.
Motilal Oswal is raising Rs 1,200 crore for its fourth real estate
In the top nine cities, there has been a massive developer consolidation. Over half of those that existed in 2011-12 had left the market by 2017-18, according to PropEquity Research. Consolidation of developers in Gurugram, Noida and Chennai has been to the tune of 70 per cent since 2011. Kolkata and Bengaluru have, in the past six years, seen a 65 per cent reduction in number of developers.
According to sources, Canada-based Brookfield is going slow on property investment in the NCR and has done none in Mumbai housing for a while. “Though they are okay with investing in Mumbai, they have not found anything they like,” sources say.
Brookfield has lent $500 million to real estate
developers in the past couple of years and says it wants to double this. When questioned for this report, it declined to comment.
The real estate
fund floated by Axis Mutual Fund is following the same plan. “We avoid NCR and Mumbai to a large extent. Products have to be affordable to the segment you are selling. There is too much stress in the NCR," says Balaji Rao, managing partner-real estate at Axis MF.
He says they prefer markets
such as Pune, Chennai, Bengaluru and Ahmedabad.
According to data issued recently by Proptiger.com, developers had unsold stock of 293,000 units as of July in the Mumbai Metropolitan Region (MMR), one of the highest in the country. Developers have been hit on multiple fronts. The recent liquidity crisis among NBFCs, earlier one of their main sources of funding, has hit their re-financing plans. Along with laws on goods and services tax and the Real Estate Regulation Act, lower sales have made their lives difficult.
Shishir Baijal, chairman at property consultancy Knight Frank, says some fund houses, given their inclination to invest in mid-segment purely residential opportunities, “would rather go with the next set of smaller markets”.
Amit Bhagat, chief executive at ASK Property Investment Advisors, says they have not done any investment in the Mumbai region in four years, for lack of a good opportunity in mid-income housing. They did, though, invest recently in the NCR.