Bangalore and Mumbai bag majority of PERE funds

Private Equity in Real Estate (PERE) is more in Bangalore and Mumbai. Other cities like Chennai and Pune are also favorites for the private equity investors.
The IT projects in Bangalore  more popular for PERE investors.

The IT projects in Bangalore more popular for PERE investors.

South and West remain favorites for private equity real estate investors. Majority of the Private Equity in Real Estate (PERE) investment is done in the south and west cities of India; especially in Bangalore and Mumbai.

Last year Bangalore, Chennai, Mumbai and Pune together received Rs.27,907 Cr of PERE investment. This amounts to 84% of the total investment.

The reports say that the Delhi-NCR received the third highest PERE Investment. But experts refute this by pointing out that though Jwala Real Estate and Indiabulls Infratech are Delhi registered companies, their projects are in Mumbai. It means that the investment in the National Capital Region remains only on the paper.

Blackstone is the largest PE investor in India. The US-based PE major alone has invested over $600 million in the Indian realty. However the group has so far invested only in the south and west India. Bangalore holds majority of their investments. The group has also invested in Pune and some southern and eastern cities. Continue reading

Divesting Real Estate Asset: MNCs’ Means To Quicker Cash

MNCs often resort to divest their real estate properties in the prime locations to overcome their financial crises.
real estate divestment

Real estate divestment : best means for bigger corporates to cut off their debts.

Many Indian Corporates and MNCs fell in debt due to sluggish market and economic recession. This sluggish market situation forces many of the Indian corporate to divest their prime real estate assets.

Mounting debt has become a serious issue and problem for the Indian Corporates and MNCs. Many of them are left without any choice than to divest their real estate assets especially which are in the prime areas. Some of them resort to leasing and other monetization methods. Continue reading

Real Estate Market of India Loses Foreign Investors

Real estate market of India has become investor unfriendly, reported UK – centered RICS.
real estate investment

High land prices and property -costs make real estate market of India unfavorable for  investment.

Real estate market of India is not preferred by global real estate investors. Recently RICS (Royal Institution of Chartered Surveyors) said the existing real estate market situation of India is not suitable for investment.

Recent researches showed up that the number of foreign investors is decreasing. Foreign real estate investors seem highly cautious about having investment in Indian real estate market.

CEO of RICS, Sean Tompkins, said that the Indian real estate market fails to meet global standards. He added that foreign realty investors are cautious of having investment in the Indian market now. Continue reading

Blackstone To Launch New Real Estate Fund in Asia

Blackstone Group LP is on the verge to launch its new real estate fund in Asia. Blackstone Group considers this as their plan to seize the Asian real estate market.

Blackstone plans to raise another real estate fund to be launched in Asia. World’s largest private real estate firm’s CEO Schwarzman disclosed their plans to become the largest buyers of commercial real estate in India. He also had laid his eyes on Australian real estate market as well. Continue reading

Liquidity Issues Upset Real Estate Private Equity

Real estate Private Equity (PE) firms are again troubled by Liquidity issues. This is mainly due to the over transparency demands from the investors.

Real Estate Private Equity

Upset.Real Estate Private Equity

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. Continue reading

Motilal Oswal to Launch Residential Real Estate Fund

Private Equity Raises Fund

Private Equity Raises Fund

Despite the adverse wind Private Equity (PE) still in the real estate business. Though most of the PE firms reported to exit from the real estate field, some are still very active in the real estate business. Residential real estate oriented fund Raised by Motilal Oswal is such an example for this. Motilal Oswal, an India-focused PE firm reported that they were planning to raise an amount of Residential real estate fund of  500-Crore. Continue reading

Private Equity Firms Ready to Quit Real Estate India

Private Equity Plans to Quit Real Estate India

Private equity (PE) firms were the top investors in the 2006-08 boom years of Real estate. But the recent situation shows that they look ways to exit. Though they aim to exit profitable returns hold them tight in the field. Fallout of negative returns from their real estate investments makes them rethink of their exit. Continue reading

Real Estate Investing in Pune, India’s Other Growth City

Most of the funds are based out of Mumbai, which gives Pune obvious preference, as the city’s proximity allows these funds to track and monitor the market – and their investments – easily. Also, Pune is among the most rapidly growing cities in India after Mumbai, NCR and Bangalore.

According to Sameer Gholve, Manager of Capital Markets at Jones Lang LaSalle India, Pune has been favoured destination amongst Real Estate PE funds since 2005 – the year FDI opened for real estate.

The total flow of PE funds into Pune until December 2011 was approximately US$800 million. This consisted of both foreign and domestic monies through around 32 major transactions over the last five years. 2009 saw the lowest flow of private equity funds into the city, though Investors regained confidence in 2010 arrived. The renewed investor confidence resulted in a massive recovery of private equity deal closures in Pune

As expected, most of these funds have been invested in the residential property asset class. In fact, residential real estate has proved to be the most consistent and enduring magnet for private equity funds into Pune’s real estate sector. In comparison, investments into SEZs, industrial parks (STPIT) and mixed-use townships have primarily been seen only before mid-2008. From 2010 onwards, the interest in these formats as asset classes has been quite meagre.

Significantly, 61% of the total private equity investments that have been seen in Pune were done in projects located in East Pune. East Pune has the majority of the city’s IT industry developments such as Magarpatta Cyber City in Hadapsar, EON IT Park in Kharadi, CommerZone in Yerawada, Weikefield IT Park on Nagar Road, etc. These IT developments have had a major spin-off effect on the profile of these areas. The higher spending power and commensurate aspirations of the people working in these establishments has caused the arrival of massive malls and also generated a huge demand for quality residential projects. These projects are proving to be the major magnets for private equity investments into Pune’s real estate sector.

2012 is a Tougher Year for Fund Raising

Due to global issues, liquidity is becoming a problem. Though the phase is temporarily, the concern cannot be ruled out. Indian real estate sector is banking on the fact that change will take place and market will come out of the situation. The fact of the matter is that next 12 months and in fact 2012, does not look too bright for the sector.

The global debt worries have led to more and more uncertainty. In the last few months, the sector has been plagued by a potential liquidity squeeze. The situation is very unsettling and the fear is that we might end up looking at the year 2008 situation. It is certain that banks will get into selective lending with more strict verifications. In 2012, we are expecting that interest rates might get stabilized but disbursal of home loans will come down.

As RBI has been steadily increasing interest rates, debt for developers is becoming expensive. Also many banks are right now not keen to lend to real estate projects. Due to global uncertainty even private equity is cautious of investing in India. In fact, companies have started looking at alternative routes of fund raising. And many a deals are being done as structured debt deals hiding behind the facade of an equity structure.

In structured debt deals, the companies—investor and investee—sign two agreements. In the publicly announced agreement the investor—a PE or a VC fund—buys an equity stake in the company; and in the second contract they have buyback clause, which allows investee company to buy back its shares from the PE/VC fund at a price that will give the fund a return of about 20% per annum over the duration of the investment.

All signs currently suggest that 2012 would not be an easy year. As debt becomes more expensive and PE funds find it difficult to deploy cash due to global economic conditions, we would see higher number of structured deals taking place in 2012. Though these structured deals are being done, they have their share of problems. The problem is when the side-contracts are not honoured.

Tata Group went into partnership with Mizuho Securities of Japan

The Tata Group Company plans to raise $500 million for an India-focused private equity (PE) fund through its partnership with Mizuho Securities of Japan. Tata Capital announced last month that it will raise 1 billion Dollars from both the foreign and domestic investors by the end of next year.
On the other hand, Mizuho Sec plans to focus on developing a growth capital private equity business in India. Also, it wants to invest in Indian companies through private transactions. According to MD & CEO, Tata Capital, Praveen Kadle, Japan’s saving base offers a stable source of capital. If all goes well, there will be high investments from Japanese and other International investors.
Also, Kadle told that the company chose Singapore only due to its transparent regulation with economic and tax advantages.

Yatra Capital to Increase Investment In India

Panama Property = Money
Photo by thinkpanama
Euronext-listed company, Yatra Capital managed by Saffron Capital Advisors, an Indian Real Estate Private Equity fund has announced to invest around 20 million Euros in India in FY10. The company plans to invest the Rs 115 cr in two deals in the domestic sector of real estate. The company has as of now invested about Rs 916 cr in 13 projects which include 2 entity-level details.

The weighted average Yatra Equity Fund covers 27 million square feet spread over nine cities. They have sold or pre let over 3 million square feet across various projects.

The chairman and Co-Founder, Yatra Capital, Mr. Christopher Wright said, “In India, one needs to be very careful on Real Estate investments as the market is volatile. After a drop in 2008-09, the realty sector is now moving up. The Indian economy is growing well making people more confident on future investments. We have invested 44% in residential projects, which would be our focus area in future. We always look at investing in affordable residential projects in tier I and II cities.”

Yatra has invested in 90 cr Residential Project and 97 cr Market City Retail Project at Pune, 115 cr in Riverbank Holdings, 91 cr in forum IT parks and 23 cr in Taj gateway at Kolkata, 160 cr in market city at Bangalore and 57 cr at Nashik.

It has entered partnership with Phoenix Mills for 5 various projects across Bangalore, Pune and Mumbai.

A presentation by Yatra to investors in March this year said, “Most markets have seen positive traction due to price cuts. However, developers have now started raising prices especially in Mumbai and the National Capital Region which has led to a slowdown in sales. Projects where pricing is realistic continue to enjoy healthy absorptions. The monetary environment tightening may impact the fund raising environment for many real estate companies still out to raise money. Investor enthusiasm for participation in realty IPOs remains muted.”

IL&FS Plan To Invest In Real Estate

IL&FS private equity is planning to increase its investment in infrastructure and Real Estate sector by the end of FY10.

They announced to increase their investment from 660 million US dollars to 1 billion US dollars in the infrastructure sector. In the realty sector they already have investments of 1.6 billion US dollars. They are planning to take deals in both the sectors as well.

Mr Shahzad Dalal, Vice Chairman of IL&FS Investment Managers Ltd said, “We will invest close to a billion dollars in infrastructure as well by about the end of this financial year.”

Bangalore Properties - Real Estate India - Vaswani Bella Vista 1
Photo by nancyarora2020
In the realty sector the firm has spent 1.2 billion US dollars from the total investment on over 30 deals. It is said that they are now looking at 10 more. The left over amount is expected to be deployed by the end of this year mainly in residential space along with commercial.

The company recently bagged a deal in the real-estate segment through IL&FS Milestone Fund in HCC’s Real-Estate project ‘247 Park’ for Rs 575 cr for a 74 per cent stake.

Mr Dalal further added, “The outlook is fairly bullish on both Real Estate and infrastructure. We believe there are a lot of opportunities. There may not be many good projects, but because of our reach and reputation, we do see some really good projects.”