Realty space gets attention from Private equity funds again
Seeing hope regarding the revival of economy after Lok Sabha elections, both foreign and domestic private equity players are now returning back to invest in Indian real estate sector, but with caution. As per the industry experts, they plan to focus on top six-seven cities.
During the last year as many as 393 PE deals totalling $9.67 billion were witnessed. Out of this $40 million were in the real estate sector.
In the words of Shashank Jain, executive director, PwC, “We believe the current sentiment cannot become worse than (in the) last few years. The real estate sector is expected to witness a revival this year. This positive sentiment is encouraging private equity players to re-look at the sector for investment.” Both the domestic as well as international players are looking at investing in the sector, he added.
January saw ASK Group raising its first tranche of $50 million of $200 million off-shore funds to invest in mid-income residential projects. Brick Eagle Group, to invest in lands for affordable housing development, is raising $100 million. To buy property assets in the major metros, Indiareit Fund Advisors has finished raising $160.5 million. IPAL has begun the process to raise $250-300 million through an offshore fund, and Rs 300 crore through a domestic fund to invest in redevelopment projects in the mega polis.
Other investors are too vying for a piece of the Indian Real Estate pie. Qatar Investment Authority is in talks to invest $200 million in some residential property in the country. According to industry sources, Milestone Capital Advisors is also in the process of raising Rs 500-crore real estate fund, which is likely to be launched in the next few months.
In the words of Milestone Capital director, Rubi Arya, “Improvement in policy framework, banking sector reforms, and increase in construction activities are encouraging investors to look at real estate. There have been investments in real estate asset class, which are giving double digit returns of around 20-22 per cent.”
She further said that the investors are now looking at more stable assets which will give higher returns. “With REITs (Real Estate Investment Trusts) coming in, investor interest in the commercial segment is likely to get a fillip. Besides, as the demand for housing is growing, the residential segment will also see investments flowing,” Arya said.
PwC’s Jain is, however, of the view that Investors will be more cautious while investing in projects. He said, “We had witnessed rigorous investments in the sector in the last few years. But after the slowdown, investors have become more cautious in partnering with developers as well as projects. Exits have also become more thoughtful.”
Source: The Economic Times
ASK group, Brick Eagle Group, equity players, Indian realty, Indiareit Fund Advisors, Lok Sabha elections, Milestone Capital, PwC, Qatar Investment Authority, Real Estate Investment Trusts, Rubi Arya, Shashank Jain
