Is realty sector seeing consolidation?

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Tier-II cities are the biggest casualty of falling property prices. With investors choosing to exit these areas, small developers are selling out to the bigger fish, reports CNBC-TV18.

 

Property is becoming cheaper, and investors are cashing out in hordes, especially in the tier-II and tier-III cities.

 

Mritunjay Kumar, Broker-NCR, Umang Estates, said, "Prices in tier-II cities like Rudrapur, Panipat and Karnal have fallen 20-30% in the last six to seven months. The earlier surge was because, it was a speculation driven market. But with rising interest rates and installments falling, investors want to get out."

 

This exodus is something no developer had anticipated. Strong pre-launch sales and speculation had driven prices higher and galvanised more construction, which led to unsold properties.

 

Ambrish Tandon, Property Broker, Lucknow, said, "I would say 60% is still available for sale and 40% may have been booked. Every builder does claim that their property has been sold out but in fact there is lot of availability."

 

Small developers are bearing the brunt of the slowdown and the larger builders are cashing in by acquiring those projects, which are reeling under debt, have failed or are half-finished.

 

Pranav Ansal, Director, Ansal API, said, "These guys are just not able to cope up. In fact, our company has earmarked a certain amount of money, which we have set aside only for buying projects of this type. This is very beneficial for us because we get a consolidated project at one time.

 

Industry experts say this is a positive trend, as it could trigger off a much need consolidation in the sector.