FDI in Real Estate raises 11,854 crore
Mumbai/Bangalore: In spite of the economic uncertainties as well as the skepticism encompassing this sector, roughly Rs 11,854 crore or $2 billion was raised within the last year with global investors once again warming up to the real estate sector of India.
Few of the prominent investments comprise Kotak Realty fund backed by Abu Dhabi Investment Authority (ADIA) and HDFC receiving investments from Sovereign Fund of Oman. Furthermore, Redfort Capital, Aditya Birla Real Estate Fund and J.P Morgan are few of the funds that have recently raised money to be invested within Indian real estate projects.
Kotak Real Estate fund recently announced that it had successfully raised Rs 1,200 crore or $200 million from a select group of investors as well as firmed commitments to raise another $200 million to close its eight-year tenure fund worth $400 million or Rs. 2,400 crore, to exclusively invest within residential properties situated in the top six metros of the country. Roughly Kotak group has invested $30 million as sponsors.
With the consolidation of the investor base the nature of investors has undergone a sea change. Presently, only long-term investors such as large government funds and pension funds are keen on investing within India. Metros offer the benefits of attracting larger transactions and the liquidity within these centers is significantly more compared to smaller cities. So far $1 billion had been raised from overseas markets by Kotak Real Estate fund had raised, which was invested within 32 properties. From six exits so far, the investment has already returned around $380 million with a 23 per cent returns.
According to realty experts, it is becoming increasingly challenging in the current market scenario to raise capital, as investors are willing to invest in real estate, however are considering consistency in management and continuity as well as exploring the market for the right projects.
The momentum in real estate is anticipated to pick up proffering more investment worthy options for investors over the next few quarters. However, with both banks and private equity tightening their purse strings, investment funds are hard to come by for builders. In the mean time non-banking finance companies are making hay while the sun is shining.
