Pune’s real estate market gets a boost from the Private equity players
Pune real estate sector is witnessing some renewed interests of private equity players. The reasons may be the uninhibited influx of professionals and a robust local economy, which is relatively less affected by the economic downturn,
The developers have also ensured a steady demand for homes and offices in the city. This has helped induce a high interest among private investment firms in the developer companies.
The private equity investments in Pune’s realty space have seen a staggering 300% jump to Rs 1,464 crore during 2013. A research report by Cushman & Wakefield has said that with the growing housing demand, healthy returns can be expected from the investments in the right project.
Importantly, Pune has bagged nearly 20 percent of the Rs 7,000 crore total inflows from private equity funds (13% higher than the previous year) in the country’s real estate sector for the year. The report said that the increase in private equity inflows may be attributed primarily to the rising investments in residential assets and other sectors like retail and hospitality. The report further added that though, the number of deals has increased to 40 in 2013 compared to 34 in 2012, there has been a marginal decline in the average deal size to Rs 175 crore ($28 million).
The report noted that there are other factors that encourage private investors. These are entry of real estate investment trusts (REITs), reducing fiscal deficit and expectations of fall in inflation and a pickup in GDP growth post the Lok Sabha elections.
Sanjay Dutt, executive managing director for South Asia at Cushman & Wakefield, said that the residential asset class continues to provide tremendous potential for growth in the coming years. Cities across country are witnessing a growth in the housing requirements. The funds being invested in the asset class, primarily in the form of non-convertible debentures are providing fixed returns. The investments in the right project have the potential to yield healthy returns.
Anuj Puri, country head and chairman of real estate advisory company JLL India, said that the investors are enthusiastic about India as a vast army of young, educated Indians is set to turn the world’s second most populous country into a talent powerhouse. He added that the consumer base is growing fast as a swelling middle class is coming online.
He further added that with the advent of 2030, India will have 68 cities with population of more than 1 million, 13 cities with more than four million and there will be six megacities of 10 million plus. All this is set to provide the country with huge opportunities.
The Managing Director of Gera Developments, Mr. Rohit Gera, said that considering the RBI’s stance on disallowing banks from lending for land acquisition, alternative sources of funds is the need of the hour for the sector. The 2008 meltdown and the steep fall in the value of the rupee have seen poor returns for the foreign investors during the first round of FDI in real estate. He further added that it is heartening to see the confidence of foreign investors in the real estate sector. The desire to own real estate by millions of Indians is also a factor that has been fuelling the demand. To ensure that the demand is met, the additional capital is necessary and the capital in the form of FDI is a welcome step in this direction.
Executive director of Paranjape Schemes Constructions Limited (PSPL), Rahul Paranjape, said that the good quality commercial space in key business districts has attracted investors as they offer attractive and steady returns. PSPL, he said, has developed a special economic zone (SEZ) in Hinjewadi in its township Blue Ridges. He added that the SEZ is fully leased and IDFC Alternatives has invested Rs 250 crore to acquire the entire ownership in it.
Vishwajit Zawar, director of Marvel Realtors, said that for a consideration of Rs 100 crore with agreed rate of return, he has diluted 30% equity in his project Edge to Capital First. Zawar added that the project is selling fast and they have actually begun redeeming the equity stake of Capital First.
Managing Director of Vastushodh Projects, Mr. Sachin Kulkarni said that the Investment of Rs 40 crore by Avenue Venture Capital in their project Anand Gram is the first PE funding in affordable housing segment. They have already received Rs 20 crore and are expecting the remaining amount within next three months. He further added that there is an exit route in equity buy back at the end of 36 months at a fixed rate of return.
Source: The Times of India
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