Optimistic of country’s real estate sector, leading private equity (PE) players feel $10-20 billion would pour into the sector in the next three years.
As much as 27% of the 50 PE firms responded to a recently-released Ernst & Young (E&Y) survey, however, expect $20 billion would be deployed into the sector, while 68% believe that it would hover around $5-10 billion in the same period. The remaining five per cent believe that total investment would be less than $5 billion.
All 50 PE players rate the Indian real estate sector as an ‘attractive’ destination and 79% of them feel that India is a ‘very good’ or an ‘excellent’ investment destination compared to other Asian countries, justifying the current euphoria about Indian real estate amongst global investors.
An established and preferred mode of investment for foreign investors to enter into the Indian real estate market, PE funds played an aggressive role in the last fiscal and the same trend is likely to continue to dominate the real estate transaction activity in 2007-08.
As much as 63% of the respondents feel that the current growth momentum witnessed in Indian realty would continue for the next five years with a sustained growth of 25%year on year. They, however, believe that high yields might not be sustainable for a very long-term as 72% of them feel that 25-30% yield could be witnessed for another two – three years.
PE firms believe that the preferred mode of investment is to take the special purpose vehicle (SPV) route and not to go for enterprise level investment, which 84% of the respondents rate promoters’ background and the quality of the management as the most important parameters before taking any investment decision.
Source: Economic Times