Real Estate Slump Temporary says Report
According to a new report, despite the slow down of private equity investments in real estate in the country during the first half of 2013, private equity firms are eager to invest approximately Rs. 11,850 crore ($2 billion) in real estate market.
During the first half of the year, private equity had was Rs. 1.638 crore, which was 46% lower compared to the first half of previous year. There were only 13 deals struck in the first half compared to 19 during the first half of last year. According to Cushman and Wakefield, despite this fall, PE firms are in discussing a number of deals. It said that the fall in private equity during the first half was due to weak sentiments and lack of good projects.
Pune recorded the highest value of private equity in real estate investments at Rs. 780 crore followed by Mumbai with Rs. 400 crore as investment. NCR and Bangalore stood third and fourth with Rs. 235 crore and Rs. 100 crore respectively. The report said that an estimated $2 billion has been already committed recently and should be deployed over the next year. Investors were willing to invest in real estate, but only in good projects with strong fundamentals. With some politico-economic and regulatory environments regularized, more investible options will open up for investors bringing momentum to real estate investments.
The report also said that factors impacting the pace of growth of the realty sector in India are the slower growth of Indian economy, current volatility in the market, political stalemates and depreciating rupee. It said that despite the slump in construction market and investible projects, the real estate sector is still the fourth sector with most private equity investments.
With more quality capital available to be deployed, both the domestic and offshore fund raising environment has consistently improved for sponsors with demonstrated track record. The report however noted that there was a growing trend towards investing in ready office space. The last three years saw a total investment of about Rs. 7,700 crore in ready office space.
