Increased trust in disciplined and professional developers in a competitive market

The pace of consolidation in India’s real estate sector is expected to accelerate as homebuyers increasingly prefer Grade-A developers. These developers have built a reputation for delivering homes on time without significant delays.

According to ICRA, the market share of major listed developers, measured as a percentage of total sales value, has been steadily increasing. Senior executives of leading companies and industry experts believe that well-established firms with strong financial resources could control more than 50 percent of the housing inventory in the coming years.

This consolidation is largely a consequence of the poor track record of many smaller developers. It is not that they were never given opportunities. Since the implementation of the Real Estate Regulation and Development Act (RERA), developer accountability has increased significantly, and the government has adopted a much stricter stance. As a result, the industry landscape is changing.

Many residential projects experienced significant delays, and several developers also defaulted on bank loans. Their actions pushed hundreds of homebuyers into financial distress, with some individuals seeing their lifetime savings trapped in incomplete projects. In search of relief, affected buyers had to approach both the government and the courts. These circumstances led to the introduction of stricter regulations and the implementation of RERA.

Regulatory reforms, including RERA, the Insolvency and Bankruptcy Code (IBC), and various measures introduced by market regulator SEBI and the RBI, have ensured that only disciplined and professionally managed developers are likely to succeed in today’s competitive market.

These policy reforms have helped eliminate unreliable developers who failed to comply with regulations. Such developers have gradually been forced out of the market, contributing to the formalization of what was once a largely unorganized sector.

In 2017, the combined market share of all branded real estate companies stood at around 17 percent. Today, that figure has risen to more than 35 percent, and it is expected to exceed 50 percent in the coming years. Larger developers are likely to acquire smaller firms, further accelerating industry consolidation.

The strong growth in pre-sales—sales achieved before project completion—during the post-COVID real estate boom is another indicator of market strength. The growth of leading developers is also reflected in their rising market capitalizations.