Private equity to invest USD 10 bn in Indian real estate

November 17, 2006	(Be the first to rate this story!)  Loading ...
Print This Story   Email This Story Subscribe Newsletter

There have been 150 overseas private equity funds who have lined up their chests to invest in Indian real estate sector, report agency sources.

According to independent estimates, a total of USD 10 billion has already been raised through this route and is expected to be invested in the next two years.

The figure of USD 10 billion is not a surprise at all. On an average, each of these funds has a minimum corpus of atleast USD 150 million running up to a billion Dollars, said property consultants.

Indian and multinational institutions such as J P Morgan, Falcon, 3i, Blackstone, Carlyle, Kotak Real Estate, IL&FS, ICICI, HDFC besides a host of others are storming into this sector.

Private investors are starting to play an important role in the Indian real estate investment market. At the end of 2005, the total Indian private equity volume was roughly USD 1.6 billion, accounting for 40 per cent of the Indian real estate capital market. This market is rapidly growing. In 2005, private property companies and individuals holdings of real estate grew by 40 per cent year-on-year and is growing at double-digit rates.

During the April-June 2006 quarter the PE firms launched funds targeting over USD 8.7 billion for investing in India. A majority, over USD 5 billion, of the new fund raising activity was aimed at real estate investments, said official of Venture Intelligence.

The funds are talking about their plans but real estate companies such as Mantri Developers, GCorp, IDEB, Sobha Developers who have received funds are upbeat on these investments.

Detailing a few recent investments and funds, an industry analyst highlighted that Morgan Stanley invested Rs 3 billion in Mantri Developers in Bangalore, Merrill Lynch invested around Rs 2.5 billion in Panchsheel Developers while Siachen Capital, a New-York based fund reportedly invested close to Rs 5 billion in Nitesh Estates. Tishman Speyer Properties has formed a joint venture with ICICI Ventures and plans to invest about USD 1 billion in India within the next five years, the analyst highlighted.

In 2005 nearly USD 850 million additional capital was invested into Indian real estate. Strong growth in private equity was driven by unlisted property funds and companies, which added around USD 82 million to the market, as well as by private individuals. However, even more significant growth came from private debt (i.e. bank lending for commercial real estate), with commercial banks lending USD 545 million during 2005.

Source: www.myiris.com

News Published Under:   Real Estate India |

Comments