Real estate Private Equity (PE) firms are again troubled by Liquidity issues. This is mainly due to the over transparency demands from the investors.
Global Market Outlook reports that stiff natured liquidity causes greater troubles to the real estate PE firms. Stiff liquidity forces the PE firms to quit the real estate. Private Equity fund managers say that this situation is created by the higher transparency demand by the investors.
A conducted survey proved that PE firms are challenged even in emerging markets. This challenging situation is not limited to real estate India. It is common all over the world which is stricken by Eurozone crisis. Russia might only be a sole exception to this.
Real estate industry in India and Brazil are ranked as highly emerging. The tough global financing market has an inverse impact on the real estate fund. Yet this was not the sole reason.
Approval of Alternative Investment Funds (AIFs) is another reason. With the approval of AIFs the real estate finds it easier to manage the situation. Moreover the PE investors are said to tighten the situation by raising more demand in the name of transparency.
As per 52% of Private Equity real estate fund managers, he first time investors demand greater due diligence prior to their commitment. The problem in reaching an agreement over the matters related to the fees and terms of dealings is severe.
For many this is the appropriate time to invest in real estate. Knowing the challenges of the time real estate fund managers can successfully organize their fund for suitable investment.
Investors demand higher transparency as well as lower fees in dealings. This turns out to be challenging for the PE firms. Investors seem to take advantage of this situation.
Real estate investors find it as suitable opportunity to invest more in the sector. Despite the challenges the fund managers seem optimistic. They say that the real estate funds are far more transparent now due to the higher demand from the investors.
Real estate investments are now performance oriented. These funds do stand for its efficiency and cost control. It is estimated that the operational cost rose by over 5%. As a result most of such funds are concentrating on outsource functions such as property management.
India is listed among the emerging real estate markets. The other major countries listed are Russia, China and Brazil.
The present real estate industry must be prepared to face the challenges. So it has to adopt the new methods and approaches which best suit the present time.