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

One of its kind analysis of on-ground performance of nearly 10,000 developers across India. The rating benchmarks past performance of developers against their future expected performance. This helps gauge whether the developer can meet his/her future expected performance, or is likely to default. As financial information of developers is hard to procure, the model uses the next best alternative- i.e. on-ground performance to determine results.

How will Developer Rating help you?

The Developer Rating model is built to address the following questions -

  • Can the developer can meet his construction commitment based on current construction velocity?
  • Is the developer generating funds from sales to meet the base construction cost?
  • Are current sales good enough for future cash flows?
  • Is there a tendency to delay or default on the developer’s part?

On-ground development is generally the first indicator of financial problems. It is therefore helpful to focus on tangible performance.

Construction Finance

  • Developer’s 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’ with large exposures
  • Facilitates differential treatment of developers based on their ratings

Fund Houses/ NBFCs

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

Parameters for Assessment

The developer's performance is calculated based on the overall performance of all his projects. Performance is mapped against the following parameters:

  • Construction 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?
  • Delays - How much is the delay in the developer's existing projects?
  • 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?
  • 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?

    These four parameters determine the probability of default on the execution side. Higher the score achieved, lower the probability of default in fulfilling their commitment.
Parameters for Assessment