Big builders likely to tighten grip as realty mkt consolidates around them

Homebuyers prefer grade-A builders, delivery of homes key accountability factor

India’s real estate sector is poised for significant consolidation, as customers increasingly shift to Grade A developers known for delivering homes with minimal delay. According to ratings agency Icra, the share of major listed developers as a percentage of total sales value has been rising. 

 

Well-capitalised builders, according to top executives of leading players and industry experts, are expected to command more than half the market’s inventory in the coming years.

 

“Consolidation is happening because of past practices of others. It’s not that the people didn’t give them chances. You can’t take people’s money and then play with it. After the Real Estate (Regulation and Development) Act, 2016 (Rera), there’s tremendous accountability and the government is reasonably strict. That is changing the system,” Aakash Ohri, joint managing director and chief business officer at DLF Home Developers Ltd, told Business Standard.

 

In the past, developers delayed residential projects, defaulted on loans, and left hundreds of homebuyers in financial distress -- many with life savings locked in unfinished properties, forcing them to seek relief from the government and courts. In response, the sector witnessed the introduction of tighter norms and the implementation of Rera. 

 

“Regulatory reforms, including Rera, the Insolvency & Bankruptcy Code, and other measures by Sebi and the RBI, ensure that only disciplined and professionally managed developers thrive in this competitive market,” said Sanjay Dutt, managing director and CEO of Tata Realty & Infrastructure.

 

Policy changes have helped weed out non-credible developers which failed to comply with regulations; they were ultimately pushed out of the market. These reforms have also contributed to the formalisation of the previously largely unorganised sector -- among both developers and lenders.

 

“There is a trifecta of consolidation at play: It’s consolidation on the consumer side, it’s consolidation on the lender side, and then it’s consolidation on the landowner side. All three are very clear that they only want to work with a handful of developers -- as purchasers, partners, sellers, lenders, or whatever role it may be,” said Abhishek Lodha, managing director of Macrotech Developers (Lodha), during the company’s Q4FY25 earnings call. 

 

Anuj Puri, chairperson of real estate consultancy Anarock Group, said at least 35-40 per cent of the residential sector is currently dominated by Grade A developers, including large and listed firms.

 

“In 2017, the market share of all the branded players was 17 per cent. Today, it has reached more than 35 per cent, and in the next few years, it will be above 50 per cent. Some of the smaller players will get absorbed by larger players,” said Pradeep Aggarwal, founder and chairman of Signature Global India.

 

Anupama Reddy, vice-president and co-group head of corporate ratings at ICRA, said the share of major listed developers rose to 15.1 per cent of total sales value in FY24, up from 10.3 per cent in FY19.

 

Grade A or tier-I developers have continued to gain market share from FY21 to FY23, according to Vikas Anand, associate director at India Ratings & Research. He said this has also led to an increase in joint ventures and joint development agreements across the sector. “Tier-I residential players still continue to lead and generate strong sales, considering the market consolidation in their favour and goodwill and brand recognition among customers,” he said.

 

Sustained pre-sales growth in the post-Covid-19 period has reinforced the market shift. This momentum is reflected in the growing market capitalisation of leading developers. Macrotech Developers’ market cap rose from ₹54,227 crore in March 2022 to ₹1.32 trillion in April 2025.

 

DLF’s market cap increased from ₹ 94,173 crore in March 2022 to ₹1.7 trillion in March 2025. Godrej Properties saw its market cap grow from ₹46,485 crore in March 2022 to ₹ 64,140 crore in March 2025.

 

Lenders now place greater emphasis on a developer’s track record of execution and delivery. While large players secure funding from banks and non-banking financial companies (NBFCs), smaller firms facing liquidity constraints have turned to Alternative Investment Funds (AIFs), which invest private capital in return for profits as residential units are sold.

 

Chirag Mehta, founder of real estate private equity firm Arbour Investments, said mid-market developers are under pressure, with top-tier builders now attracting the bulk of available funding. “Now, capital values will be increasing. This further leads mid-market developers into a conundrum. So, the mid-market players are finding it challenging,” he said.

 

Top executives believe the sector’s consolidation trend is set to continue. “Today, we’re nowhere close to the end of the consolidation cycle,” said Lodha.

 

“It’s going to become harder and harder for smaller firms -- unorganised and without systems and processes -- to compete, because delivery is now the focus,” added Cyrus Mody, founder and CEO of Mumbai-based Viceroy Properties.