Delhi-NCR residential market continues to attract PE investments
Despite a sluggish economy, the real estate sector of the national capital region (NCR) continues to lure private equity investments.
PE investors look at the region as a potential investment opportunity offering huge assured returns as it observes stable demand from investors as well as end-users.
Gurgaon, Noida and Faridabad are the prime cities accounting for a major portion of the residential supply, among all the cities and towns under the NCR.
Developers prefer completion than new launches
The Delhi-NCR market has been picking up speed with developers mainly focusing on completion rather than new launches, states a report by a property consultant Knight Frank. The market has seen a total absorption of 35,000 housing units in H1 of 2013, which is around 18 percent higher than the absorption rate of same period last year. The rise in number of sales can be attributed to the factor of increased number of launches in the affordable housing segment.
Delhi-NCR performed well in H1-2013
According to Knight Frank, the NCR property market has displayed positive signs of growth in the first half of the current year. About 49,000 units were launched in this period showing a marginal increase of 11 percent compared with the first half of 2012. A comparative analysis of the values with that of the first half of 2010 and 2011 shows that there is a drop of 59 percent and 33 percent respectively.
It has also been observed that many builders are even postponing their project launches in order to bridge the supply and demand gap.
Recent PE investments
Red Fort Capital has invested Rs 1,000 crore into a Lotus Green project. ASK Property Investment Advisors has invested Rs147 crore in ATS Group’s Gurgaon housing project while Xander Group has invested Rs 280 crore into Supertech’s township project in the city. Also Ashiana Homes has recently secured Rs 180 crore funding from Piramal-backed Indiareit for its Gurgaon project.
Even the consultancy Jones Lang LaSalle (JLL) has started a separate entity, Segregated Funds Group, in order to raise capital to invest in Indian real estate.
Emerging corridors lure investors
Emerging corridors of growth having huge potential that invests investors and consumers are always prime areas for focus, said market experts. Areas like Gurgaon-Noida corridor, wherein there are large scale employment opportunities, tend to attract huge investments.
Rise in property value drives growth of investment
The growth of investments is directly dependent on the appreciation in capital value of properties. If the property shows a 20 percent growth, it means that the investments have also grown in a similar rate.
Mid-income segment observes major demand
Demand for properties is the highest in the mid-tier residential category with houses priced in the bracket of Rs 30-80 lakhs. Therefore, PE investors too, prefer to invest in this segment by looking at the development potential.
