Indian Realty May See $1.2 bn in Private Equity

June 11, 2007	(Be the first to rate this story!)  Loading ...
Print This Story   Email This Story Subscribe Newsletter

Indian real estate may see only $1.2 billion in private equity deals in the current year, as investors are inclining to spread their investment over several years, mirroring the duration of real estate projects.

The amount will just make up for 20% of the estimated $6 billion queuing up to invest in the real estate during 2007, with more than a dozen private equity firms in a look out for investment prospects.

A little amount is likely to be deployed in the next six months as equity deployment is done over a long period, says Abhishek Kiran Gupta, senior manager, research, Jones Lang LaSalle, a real estate advisory.

Indian realty is attracting large interests from both the local and international private equity firms as the market promises high returns. The expected returns in Greenfield projects are about 20-25%, against 15-18% in the other Asian markets.

A major part of private equity investment is likely to make its way for the tier- I cities. Around 94% of capital investment in real estate may deploy into metros including Delhi, Mumbai, and Bangalore, says a report compiled by Jones Lang LaSalle.

Metros are generally believed to have good infrastructure and comparatively lower risk. However, tier-II and tier-III cities are also emerging as preferred investment destinations.

With expansion of major property developers like DLF in tier-II cities, private equity firms are feeling comfortable in making investments in these cities.

Also, most capital investments are being deployed in Indian residential sector and in mixed-used projects. Recently, Morgan Stanley has signed a $150 million deal with Oberoi Constructions in Mumbai for the development of mixed-use project and DLF’s deal with Nakheel was for the development of a residential project.

The share of property market in the total foreign direct investment (FDI) in India is also likely to reach 26% in 2007-08 against 16% in 2006. Both listed and unlisted real estate companies will continue to attract overseas investments in India. A buoyant commercial real estate sector and high capital and rental value appreciation are the major factors filling delight cup of foreign investors.

News Published Under:   Real Estate India |

Comments