The residential property segment in India, is expected to receive investments worth USD 1 billion this year, given its attractive rate of returns, which average 20%-22% per annum, an industry expert said.
“Private Equity funds in the Indian real estate sector, have already raised USD 420 million in the first two months of this year, compared to USD 520 million for the whole of last year,” said Rubi Arya, executive vice-chairman of the Mumbai-based Milestone Capital Advisors Ltd.
Mid-segment housing and affordable housing can provide returns as high as 20%-22% per annum through hybrid investing, that is capital security plus equity upside, she said.
“With the Real Estate Bill mandate, availability of deals for Private Equity firms will certainly go up. Investors can look forward to far higher transparency and ease of doing business with developers, with the recently-passed real estate bill. This has led to a lot of warming up of FDI and NRI investments towards Indian real estate,” she said, adding that the reforms in the real estate sector will help the residential as well as commercial segments.
The availability of foreign capital will naturally increase with the government permitting NRI investments into domestic Alternate Investment Funds. The Real Estate Investment Trusts will soon see listings by developers and thus, lifting the commercial reality market to a highly profitable investment climate, according to Arya. Costs on real estate construction have stabilised, owing to low fuel prices, which leaves developers with overall margins for positive growth.
“With such positive developments, the India story is growing by leaps and bounds and it is just a matter of time for this sector to begin its upward journey once again, after a prolonged period of gloom,” she added.
Milestone manages USD 800 million or 25 million sq ft of residential, warehousing, commercial and office spaces, since it began operating as a PE funding concern in 2008.
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