PEs Mark a Comeback in Realty Sector

May 25, 2009	(Be the first to rate this story!)  Loading ...
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With the stockmarkets set on the path to recovery and top realty companies such as DLF and Unitech managing to raise funds to bridge their debts, money has started trickling into the Indian realty sector that had tanked in September 2008 after years of a joy ride. Private equity players, who had virtually vanished from the realty frame, are now returning with domestic funds taking the lead, say a clutch of real estate lenders and funds that SundayET spoke to. According to some of the most optimistic projections, the Indian realty market will attract Rs 10,000 crore to Rs 12,000 crore in the next 12 to 18 months. “We have already entered into two deals and expect to close them within the next couple of months,” says. Subhash Bedi, MD of Red Fort Capital, a real estate private equity. Mr Bedi says that most of the international funds dedicated to the sector have packed up, but local firms sitting on cash piles have started to take a relook at the sector.

Says Kaustuv Roy, ED of Cushman & Wakefield, a realty consultancy: “There has been a movement as far as funds to the realty companies are concerned. While nothing much was happening between July and December 2008, in the last couple of months, almost every real estate fund has become active and is aggressively looking at good projects for investing.” This new interest, however, comes with riders. Funding is mostly on a project-to-project basis, and most of the investments are through special purpose vehicles. “The market is improving and there has been a pick up in sales over the last three months, many institutional financiers and PEs are showing interest but they are keen on working on a project-to-project basis,” agrees Rohtas Goel, CMD, Omaxe Group. Kotak Realty Fund, a prominent player in the sector is looking to deploy around Rs 3,000 crore in the next two years in the Indian realty sector. “We are looking at a couple of transactions in this quarter and are more interested in the residential space,” says CEO S Sriniwasan.

These institutional investors are now mainly looking at the residential space. In fact, both the deals, where Red Fort Capital made investment, are in the residential segment. Ritesh Vohra, director at Saffron Asset Advisors, a private equity fund operating in the real estate sector, adds that they are in search of good projects for investment during this quarter. In addition to PEs, other financial institutions have also begun to spot opportunities to deploy funds. Indiabulls Financial Services is also said to be evaluating several projects for investment. On a sober note, Anshuman Magazine, CMD of CB Richard Ellis (South Asia) feels that despite the improvement in sentiments, it may take some time for actual deployment of the money.

News Published Under:   Real Estate India, Real Estate Developers |

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