NEW DELHI: Despite back-to-back repo rate hikes by the RBI in the calendar year 2022, the average cost of debt for the eight listed realty players fell to the lowest level since the start of the pandemic. According to data provided by real estate consultant Anarock, the average cost of debt of 8 listed players reduced from 9.64% in the fourth quarter of the financial year 2019-20 (Q4FY20) to nearly 8.14% in the second quarter of FY23 (Q2FY23). Interestingly, these players witnessed a cost reduction of 150 bps in the past 10 quarters despite a repo rate hike of 150 bps.
The net debt of these developers has also come down to Rs 20,800 crore by the end of Q2 FY23 - lower than the pre-pandemic levels. It was Rs 24,500 crore by Q4FY20 and had risen significantly to Rs 42,900 crore by the end of Q3FY21.
While funds availability is a challenge for many smaller real estate developers, the larger players - particularly listed players - can raise funds at competitive rates thanks to good track records, high market acceptance and brand trust, and demonstrated financial discipline, said the consultancy firm.
“The slew of measures by the RBI and government to increase liquidity during the pandemic helped developers to tide over the difficult times,” says Anuj Puri, Chairman of ANAROCK Group. “These included a reduction in repo rate, loan restructuring, stamp duty cuts, and a relief package to boost the economy.”
“This momentum majorly targeted projects by the top listed players, who sold 37 Mn sq ft in FY20, 41 Mn sq ft in FY21, and 57 Mn sq ft in FY22,” says Puri. “Not surprisingly, this ensured that these players could access funds at cheaper rates, significantly improving their liquidity and capital structure.”