A K SHARMA, CEO & Director, LICHFL AMC
India’s mid-income housing would be relatively less affected by any adverse movements in the market as these are need based as compared to discretionary based housing requirement, according to A K SHARMA, CEO & Director, LIC Housing Finance Ltd Asset Management Company Ltd [LICHFL AMC] headquartered at Mumbai. Besides, the realty fund has a plan to invest in Residential housing segment in NCR and some parts of North India.
Excerpts of the candid conversation with Sandeep Pattnaik of Ghrabari.com.
Q.1. After investing into residential segment, the LICHFL AMC's Realty fund is eying commercial assets in the Country. Please share a bit about that.
A. In the commercial space, the Fund is evaluating investment opportunities in income yielding micro infrastructure assets like IT Parks, Warehouses, Educational & Hospital Buildings.
Q.2. What is your current Asset under Management (AUM) and how you are thinking to deploy the corpus and in which specific markets, especially in the residential real estate?
A. Out of the corpus of Rs. 529 Crore, about 50% of the corpus have been drawn down. The balance is expected to be deployed in the next few quarters as we have a strong pipeline. In addition to the current geographies in south and western part of India, we are evaluating opportunities in NCR and a few other locations in the North.
Q.3. What is your view on the impact of sluggishness in the Indian Realty sector on the fund’s ROI and the prospects ahead in the sector?
A. Good thing about sluggishness in the sector is that Funds are more cautious and valuations are not stretched. Our assumptions have been made on a conservative basis and we do not foresee the likelihood of any major impairment on our ROI. Given the overall growth expectations of our economy, we expect the fund to also benefit from the growth. The jury is out on what India’s GDP growth to be in the coming years. Whatever may be the scenario, India will continue to be one of the fastest growing economies in the world! I think current tough times are indeed throwing interesting opportunities.
Q.4. The fund's investment focus has been basically on companies involved in mid income housing projects besides other urban infra projects. What is the idea?
A. The mid income housing would be relatively less affected by any adverse movements in the market as these are need based as compared to discretionary based housing requirement. Many a times we have seen that mid income housing projects are larger developments, which have substantial requirements for trunk infrastructure. With the western markets slowly stabilising, we expect the IT Sector to see an uptick. Warehouses would be fuelled by our consumerist and aspirational economy aided by the increasing move to ease geographical impediments in taxation structure. Our Economy is under served in Education and Healthcare and these sectors have huge growth potential.