NRI Real Estate and Property Investment in India
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Indian Realty Getting Consolidated
Tuesday, September 04, 2007

Small realty companies are being absorbed by the bigger players in the industry. – DLF is one such company which is buying up the land banks of smaller firms. The company’s sources confirmed that requests from several small realty firms had been received and their proposals are being considered.

Similarly, Ansal API has also been approached with similar offers, and recently concluded a deal in Ludhiana. According to the large private developers, smaller realty players are “land assemblers” at best, owning large tracts of land but lacking the funds to develop real estate projects.

By selling their land to big developers, the landowners make a handsome profit. Large developers are saved the trouble of scouting for land banks, which is an arduous task.

Those in the industry, like Rohtas Goel, opine that only a handful of realty developers would be left as the industry gets more organized and consolidated. When the realty boom started a couple of years ago, several new firms ventured into the real estate business, buying large tracts of land for development.

Some of these companies met their targets and made handsome profits. When pre-launch sales were banned in 2006 and bank loans to developers not as forthcoming, these companies found their sustenance in the business difficult.

Selling off their land banks to the bigger players in the business therefore seems to make perfect business sense.

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