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Realty Tycoon Vikas Oberoi says a liquidity squeeze may help to reshape India’s property industry.
Scarcer financing, combined with tighter government oversight of the sector in recent years, may help to clear away some fly-by-night firms and foster consolidation, according to the chairman of Oberoi Realty Ltd.
Defaults last year by Infrastructure Leasing and Financial Services (IL&FS) group triggered a crisis among shadow lenders, putting the squeeze on borrowers including home builders. The fallout from the saga may help firms such as Oberoi, the nations third-biggest listed developer, to expand shares of a fragmented market.
The money will now be available to only credible developers, Oberoi, 49, said in an interview in Mumbai.
Debt concerns have pushed funding costs for non-bank lenders to multi-year highs in recent weeks, casting a shadow over the Indian economy ahead of the nations election.
India’s property industry has been reeling for years from the economic shock of the government withdrawing high-value rupee notes from circulation in 2016 and imposing a sales tax the following year. The sector has seen sluggish sales, mounting inventories and falling prices. Tighter regulation took effect in 2016 and 2017.
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