Mumbai: Kotak Realty Fund, part of the Kotak Mahindra Group, plans to invest between R400 crore and R500 crore in three to four residential projects in the current financial year.
The fund is looking at housing projects in Bangalore, Delhi and the National Capital Region (NCR), and Mumbai for probable investment opportunities. The investment size will be close to R100 crore in each project, V Hari Krishna, director (investments), Kotak Realty Fund, told FE.
The fund is looking to cash in on the increase in the number of new project launches as the regulatory framework is getting clearer in cites like Mumbai. With demand for residential property remaining stable in Bangalore, the southern city could see some influx of fresh launches and so would Delhi and its neighbouring areas.
“With the regulatory cloud lifted, we expect some new residential projects to take off in the next six months and the market will see new launches soon,” says Krishna. Recently, in Mumbai alone, the Brihanmumbai Municipal Corporation (BMC) approved proposals for 78 high-rise buildings, which were stuck for want of clearances for the last 14 to 15 months.
Also, in the last two years, private equity investments have gained favour among realty companies as bank lending to the sector remained tight. According to a Fitch Ratings report on August 6, the year-on-year lending growth to the commercial real estate sector by banks fell to just 1.5% in June 2012. At the same time, there has been a pick-up in private equity investments into the real estate sector, Fitch observed.
Private equity investments between January and August surged close to 15% to $1,014.19 million (R5608 crore) against $884 million in the year-ago period, according to data shared by VCCEdge, a provider of data on mergers and acquisitions and private equity.
Kotak Realty currently has assets under management worth $811 million. The fund has invested in more than 32 projects since it began operations in May 2005. Some of its key investments include high-end luxury residential project of Sunteck Realty in Mumbai, mid-end residential development in Gurgaon by Orris Infrastructure and Clover Greens’ villas surrounding a golf course in Bangalore, among others.