Private Equity investment in the real estate sector may go up as much as 15-20 per cent in the current fiscal to over $13 billion in the wake of acute crisis of funds plaguing the growth of the industry.
“Private Equity players started investing in India's real estate space since 2005. The sector had received $2 billion private equity investment in 2005 which went up to $4.5 billion the next year and to a whopping $11 billion in 2007. This year, it should go up by 15-20 per cent,” financial services firm Jones Lang LaSalle Meghraj's Chairman and Country Head Anuj Puri told PTI.
There are mainly three preferred routes for developers to ensure funds for their projects – raising funds from capital markets, pre-sales funds from prospective buyers and loans and advances from banks and other financial institutions.
“All of these are going through a rough patch which has paved the way for private equity investments in the country's real estate space,” Puri said.
Raising funds from the capital market has almost come to a stand still since the market has been sporting a bearish look for quite sometime and the signs of it looking up is as bleak as the crude prices coming below $100 per barrel from over $140 now.
With the balooning inflation and inflation rates which have prompted banks and financial institutions to tighten on the lending side, developers are finding it increasingly difficult to mobilise funds for their projects.
Source: Sify