Liase Foras Independent, non-brokerage realty research company
Liase Foras Independent, non-brokerage realty research company
Independent, non-brokerage
realty research company
An innovative rating module designed to assess developer performance

Brief Description

It is the first of its kind analysis of the on-ground performance of more than 8500 developers across 55 census cities of the country. The rating benchmarks the past performance of developers against their future expected performance. This helps gauge whether the developer can meet the future expected performance, or whether he is expected to default. The financial information of developers, which is generally hard to procure, is thoughtfully excluded from this analysis. The focus is on the physical performance.

DEVELOPER'S RATING

How can Developers' Rating help you?

The Developers' Rating module is built to answer following questions -

  • Can the developer meet his construction commitment based on current construction velocity?
  • Is the developer generating funds from sales to meet the base construction cost?
  • Is current sales good enough for future cash generation?
  • What are the tendencies of delay on the part of the developer?

On-ground performance is generally the first indicator of financial problems. Thus it would help to follow this tangible performance.

Construction Finance

  • Developers' performance can be useful during the credit assessment of a proposal
  • Quarterly monitoring of developers/projects
  • Differential treatment of developers can be done based on the ratings determined.

Mortgage Finance

  • Quarterly monitoring of developers’ performance with large exposures
  • Facilitates differential treatment regarding the product offering so that disbursements can be offered on the basis of ratings determined.

Fund Houses/ NBFCs

  • Assess performance of the developers whom you are dealing with for the first time
  • Identify the investment opportunity with developers/projects, based on your guidelines.

Modalities of the Product

Parameters for Assessment

The developers' performance is the sum total performance of all his projects. Performance is mapped against the following parameters:

  • Sales Velocity - Whether at the current pace of construction, a developer can meet the set delivery deadlines. If not, then by what multiple does he need to increase his construction pace?
  • Cash Condition - Whether the cash generated from average monthly sales receipts of the last 12 months is good enough to meet the next month’s construction expenses. If yes, by how much do receipts exceed the expense; and if no, what is the percentage of shortfall?
  • Sales Velocity - Are the sales good enough? Has the developer sold nearly 2.75% of the stock on a monthly basis in the last 12 months?
  • Delays - How much is the delay in existing projects?

These four parameters provide one with the probability of default by the developer especially on the physical front. Higher the score achieved, lower the probability.

Modalities of the Product