Real estate in India faces funding problem
Indian real estate is going through a slowdown amid stagnating sales and facing funding issues with foreign investors.
Private equity firms focussing on real estate are facing difficulty
to raise funds through foreign high net-worth individuals (HNIs) and institutions.
According to experts, both international and national PE firms are not able to close funds if they are raising it from outside India. Also, the PE firms are not able to go to the same investors as they were unable to give them the promised returns.
During 2005-2007 when the real estate was booming, PE firms promised the investors to return 20 percent or more but they could not keep their promises.
For example, the PE fund of a financial firm which had raised around $2 billion (Rs 10,900 crore) and made around 27 investments across India is now unable to exit a project in Chandigarh. They have even extended the investment cycle by one year which was about to end in 2012 but still are facing problem to exit.
Another incident happened with the PE fund of a major Indian bank which had invested Rs 200 crore in a commercial property in South Mumbai in 2007, was unable to fetch the amount they have invested. Real estate in India is going through a tough time and the sector is also not giving returns up to the mark as it was said two-three years ago.
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Commercial Property, Foreign investors, high net worth individuals, Indian real estate, PE firms, Real estate in India, Realty News
