Realty PE firms to double investments this fiscal
The inflows of PE investments in real estate totalled Rs 15,410 crore in 2014, more than double the investment of Rs 7,360 crore in 2013, according to a report by real estate consultant Cushman & Wakefield
Apr 06, 2015
Source : The Hindu BusinessLine


The improving economy and business sentiment seem to be whetting the appetite of private equity players for a larger role play. Realty-focused PE firms are looking to double their investments this financial year.

Higher commitments

For instance, real estate-focused private equity firm ASK Property Investment Advisors has committed to invest about Rs 1,000 crore this financial year. This is exactly double of the Rs 500 crore, the firm had earmarked for last year.

“We didn’t commit too much money last financial year, while most of our commitments came during the last quarter of the year, as the direction of the market went from bad to worse. We were waiting for the markets to show more distress and give us money for money deals,” said Amit Bhagat, CEO and Managing Director, ASK Property.

In this financial year, the company will continue to invest in residential projects with focus on Bengaluru, Pune, Chennai, Mumbai and National Capital Region (NCR). Milestone Capital Advisors, which invested about Rs 500 crore in FY15 across commercial and residential, intends to deploy about Rs 800-1,000 crore this year.

Higher demand from metros

“The real estate sector is definitely looking up this year, and deployments would depend on the apetite in the market. Both residential and commercial sectors would continue to post growth in this year and there is a lot of interest among high networth individuals to invest in the sector,” said Rubi Arya, Vice-Chairman and Director, Milestone Capital Advisors.

For the real estate sector, the high demand continues to flood from the metros, while growth is also coming in from tier-I and -II cities, she added.

“Some markets are very interesting such as NCR and Mumbai, and funds are optimistic, even though pricing is still not attractive. In the last 12 months, investors were looking at fresh asset creation rather than refinancing, which was the norm till now,” Ashish Singh, Managing Director (real estate investment), Standard Chartered Private Equity Advisory.

Rising inflows

The inflows of PE investments in real estate totalled Rs 15,410 crore in 2014, more than double the investment of Rs 7,360 crore in 2013, according to a report by real estate consultant Cushman & Wakefield. However, there are companies opting for a cautious FY16. “According to me, doubling would be very aggressive. We are conservative as we have to see how the markets pan out and how our previous investments are performing,” Indian Property Advisors Pvt Ltd (IPAL) Managing Partner Ramesh Jogani said.

Fund raising

“This year, a lot of fund creation is also expected to happen, and with many preferring equity rather than debt structures,” Standard Chartered’s Singh said.

ASK Property, which launched a Rs 1,500-crore fund last year, will also look at raising funds from offshore markets, Bhagat said, declining to disclose the details of the funds.

On its part, Milestone Capital will also do more funds, while many exits are also expected this year.

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