According to Real Estate (Regulation and Development) Act of 2016 (RERA), most of the builders are focused on the completion of their projects which will result in a fall of unsold inventory in year 2018, as Fitch rates. This fact will lead to decrease the number of launching new projects in the next year.
The buyers intend to take an interest in completing projects due to lower taxes, after the pioneering of goods and service tax (GST).
If we take a look up on the unsold inventory of seven big developers as a sample for the year 2016-17, it has risen up to 66,800 crore, while in the financial year 2015-16, it was 63,100 crore.
Fitch added if the things will go the same, then the developers on the small-scale led to asset sales survive and maintain liquidity, while the developers on the large-scale will persist.
Fitch takes the leverage of two developers (X and Y) and envisages that in FY18 and FY19, the leverage of Developer X and Developer Y is likely to drop to 68% and 67% respectively, in comparison of FY17 that is 70%. Concerning the current situation, the builders and developers are expected to focus on completing the existing projects rather than invest in land banking.
Moreover, the pre-sales of both the developers in FY17 are around Rs 9,500 crore, while it is expected the pre-sales might rise to around Rs 14,000 crore in FY18 and over Rs 16,000 crore in FY19.
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