Indian Realty Getting Consolidated

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.