The Indian real estate sector has emerged as a dominant player in the capital markets, accounting for a significant 17% of the total qualified institutional placements (QIP) issuance across sectors. The real estate sector raised INR 12,801 crore out of the total INR 75,923 crore raised through QIPs. This trend reflects the increased appetite of real estate developers to raise funds through IPOs and QIPs, particularly in the post-COVID era. The success of these capitalization efforts underscores the sector's continued ability to attract both retail and institutional investors, driven by factors such as improved transparency, strong post-pandemic recovery, and rising investor confidence.
The real estate sector has emerged as a significant player in the capital markets, contributing a notable 17% to the total qualified institutional placements (QIP) issuance across sectors. According to a report by Anarock, the real estate sector raised INR 12,801 crore out of the total INR 75,923 crore raised through QIPs.
After the renewable energy sector, real estate has become the second-highest contributor to the QIP market so far this year. This trend reflects the increased appetite of Indian real estate developers to raise funds from the capital markets, particularly through initial public offerings (IPOs) and QIPs, in the post-COVID era.
Anuj Puri, the chairman of the Anarock Group, attributes this to the real estate sector's "aggressive expansion" plans, which have driven developers to seek capital from these avenues. The success of these capitalization efforts underscores the sector's continued ability to attract both retail and institutional investors.
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. QIPs have become a popular fundraising tool for the real estate sector.
The report said real estate developers are also raising funds via IPOs to fund new project launches across geographies. Six developers have collectively raised INR 5,275 crore through mainstream IPOs since 2021. The developers who raised funds via IPOs since 2021 are Macro Tech Developers Ltd, Shriram Properties, Keystone, Signature Global, Suraj Estate, and Arkade Developers. Among these, Mumbai-headquartered Macro Tech Developers Ltd raised the highest at about INR 2,500 crore.
Factors driving IPO and QIP traction included improved transparency in the real estate sector largely due to the implementation of RERA; strong post-pandemic recovery; surge in residential sales value; strong Nifty Realty Index performance and institutional investor confidence, the report showed.
The report further reveals that over 13.62 lakh units have been launched across the seven major cities between 2021 and the first nine months of 2024. Concurrently, housing sales in these cities have soared to approximately 14.36 lakh units during the same period, leading to a over 10% decline in unsold housing inventory, despite the high rate of supply addition.
In conclusion, the real estate sector's robust fundraising through QIPs and IPOs highlights its significant role in India's capital markets post-COVID. With heightened transparency, strong sales, and institutional confidence, developers are effectively financing growth strategies. This momentum, evidenced by substantial unit launches and a notable reduction in unsold inventory, bodes well for the sector's future trajectory and investment appeal.
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