Developers Raise Rs 12,801 Cr in 9M of 2024 Via QIP 

Mumbai / October 28, 2024: After the pandemic, Indian real estate developers have been aggressively tapping capital markets through Initial Public Offerings (IPOs) and Qualified Institutional Placements (QIPs). 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, ANAROCK Group said in a press statement.

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.

Anuj Puri, Chairman – ANAROCK Group, said, “ANAROCK’s analysis of the available data trends of listed developers on the National Stock Exchange shows that by the third quarter of 2024, the real estate sector contributed over 17% of QIP issuance across sectors, or INR 12,801 Cr of a total of INR 75,923 Cr.”

“After renewable energy, real estate comes in second highest among sectors to raise funds through QIP so far this year,” he says. “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.”

Robust housing sales growth after the pandemic has prompted leading developers to unleash relevant inventory across markets. As per ANAROCK Research, 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 approx. 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,” says Puri. “Their success in these capitalization efforts underscore the sector’s continued ability to attract both retail and institutional investors. We expect investor participation to grow manifold in the coming years.”

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 INR 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, the statement added.

The real estate sector has witnessed a remarkable transformation in recent years, driven by increased transparency and strong post-pandemic recovery. The implementation of RERA, GST, and demonetization has significantly improved industry compliance, boosting investor and buyer confidence. Developers are now adhering to stricter regulations, which enhances their credibility and facilitates fund-raising.

Post-2020, the sector has experienced a robust rebound, particularly for Grade A developers. The surge in demand for high-quality residential projects has led to increased project launches. By September 2024, the inventory overhang reached a 14-month low, indicating strong market absorption. Residential sales value reached INR 4.2 lakh crore in the first nine months of 2024, a 22.6% increase over the same period in 2023. This growth has positively impacted developers’ cash flow, enabling them to undertake new projects and meet rising demand. The Nifty Realty Index’s 250% surge between January 2021 and September 2024 reflects increased investor confidence in the sector’s long-term potential. Institutional investors have also shown renewed faith, with a record number of QIPs in the real estate sector this year, totaling INR 12,801 crore.