Real estate developers have raised ₹12,801 crore through the qualified institutional placements route in the first nine months of 2024 which is almost 17% of the total QIP issuance across sectors that stands at ₹75,923 crore, a report by Anarock showed on October 28.
The real estate sector raised the second highest funds through the QIP route after renewable energy, it said.
Increased transparency, a robust post-pandemic housing sector recovery and strong investor confidence are the factors driving a surge in activity in the real estate sector.
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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.
“This strong QIP activity highlights the sector’s crucial role in India’s broader capital markets – and the institutional investors’ growing confidence in Indian real estate,” said Anuj Puri, chairman – ANAROCK Group.
The report noted that robust housing sales growth after the pandemic has prompted leading developers to unleash relevant inventory across markets. As per ANAROCK Research, over 13.62 lakh units have been launched across the top 7 cities between 2021 to 9M 2024.
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Concurrently, housing sales in these cities have soared to approximately 14.36 lakh units in this period. Effervescent sales led to an over 10% decline in unsold housing inventory in this period, despite the high rate of supply addition, the report said.
Real estate developers are also raising funds via IPOs to fund new project launches across geographies, the report said, adding that since 2021, six developers have collectively raised ₹5,275 crore through mainstream IPOs. The developers who raised funds via IPOs since 2021 till date are Macrotech Developers Ltd, Shriram Properties, Keystone, Signature Global, Suraj Estate and Arkade Developers.
Among these, Mumbai-headquartered Macrotech Developers Ltd raised the highest at about ₹2,500 crore.
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“To fund their aggressive expansion, these developers are turning to IPOs and the QIP route. Their success in these capitalisation efforts underscore the sector’s continued ability to attract both retail and institutional investors. We expect investor participation to grow manifold in the coming years,” said Puri.
Factors driving IPO and QIP traction
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.
