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India Ratings maintains negative outlook on real estate for FY21

India Ratings maintains negative outlook on real estate for FY21

MUMBAI: India Ratings and Research (Ind-Ra) has maintained a negative outlook on the overall real estate sector for 2020-21 (April-March). The stimulus packages provided by the government for the sector does not provide much hope given the limited financial flexibility of and reduced credit availability to companies.

The ratings agency has maintained a Stable Outlook for players in grade-I residential real estate, commercial office and retail property development and operations and a Negative Outlook for non-Grade-I players for the financial year.

For the remaining part of financial year 2019-20, ratings agency expects grade-I residential players to continue generating strong sales due to the ongoing consolidation in the market with fringe players losing ground in favour of grade-I with better brand and execution ability.

As per India Ratings’ analysis, the market share of the top 10 listed players gradually doubled to 13% in 2019-20 from 7% and 6% in 2017-18 and 2016-17, respectively. It expects this trend to continue for 2020-21 as well.

Conversely, the woes of non-Grade-I players has increased amid liquidity issues on account of declining sales, negative free cash flows, stricter regulatory compliance under Real Estate (Regulation and Development) Act and slowdown in lending from banks and non-bank finance companies, India Ratings said. The ratings agency believes housing affordability in the current financial year to be better than 2011-12.

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