PE Funding Affordable Housing
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The private equity (PE) investments in the real estate sector in India are growing at a consistent pace. In year 2016, a total of Rs 40,000 crore were pumped by the PE players from across the world into the sector. These numbers were among the highest in the past 10 years, as per the India Brand Equity Foundation (IBEF).

But that is not the end of the story, it is the beginning. It is believed that the real estate sector in India is set to receive a fresh flood of investments from around the world. The global players have been keeping a close track of the kind of reforms that are going on in the sector.

Under the leadership of Prime Minister Narendra Modi, the government of India has elevated India’s image by the several notches. Today the world sees us differently. The Doing Business 2018 report by the World Bank placed India as one of the top 10 countries that introduced the most reforms. In fact, India was the only country that performed well out of the whole Asia Pacific region.

Here is a quick snapshot of the PE investment deals that reveal the kind of growth trajectory the real estate sector in India is sitting on:

  • The International Finance Corporation (IFC) will inject US$ 200 million in the Housing Development Finance Corporation (HDFC) to channelize funds towards affordable housing projects in India.
  • HDFC recently announced its US$ 500 million fund dedicated towards affordable housing projects in India.
  • Piramal Realty, which is the part of the Piramal Group, is investing US$ 377 million in a large corporate park project spread in over 16 acre land in Kurla, Mumbai.
  • South Korea based Mirae Asset Group is all set to invest US$ 300 million in the commercial real estate sector in India.
  • Godrej Properties, which has come up as one of the most reliable brands in the real estate development space in India, has forayed into the hospitality sector in alliance with the Taj Group. The company is planning to develop a 150-room Taj Hotel across cities.
  • Xander, one of the leading PE funds in the world, has announced its participation in the development of two major Special Economic Zones (SEZs) worth Rs 2,200 crore.
  • ASK Property Investment Advisors have created a fund of US$ 60 million to invest in the property markets of Bengaluru and Chennai.

These are just a few transactions, which reflect the sunshine flashing over the real estate sector in India. After PE, the sovereign wealth funds (SWFs) followed by pension funds are the second largest contributors to the real estate investments in India.

The most striking thing is that these funds are known for their conservative nature and aversion to risk oriented investments. These funds are from Japan, Middle East and other regions. If they are increasing their exposure to the Indian market, then definitely we can say that the things are falling in the right place.

Undoubtedly all the pain-staking efforts done by our governments are resulting into results and the long term scenario for the real estate sector in India looks to be promising.