Indian Real Estate becomes attractive for Foreign Investors after 5 years
Indian Real Estate becomes attractive for Foreign Investors
Indian real estate market has become increasingly attractive for foreign investors after almost 5 years, as indicated by India-specific fundraisings.
Talking about the improvement in foreign investors’ confidence in real estate market, Shobit Agarwal, Managing Director of Capital Markets at JLL India, said “During the pre-GFC (global financial crisis) phase, 82% of funds got raised in US dollar. This reduced to 57% in post-GFC phase when micro-market understanding was required more than banking on the macro-economy. Interestingly, the contribution, 2014-onwards, has increased considerably to 70% – hinting that the positivity is here to stay for some time.”
The increase in investment gained impetus before the Lok Sabha elections of 2014 and has only increased further as evidenced by funds amounting to $2.2 billion (Rs. 14,860 crore) that has been raised so far in the current investment cycle.
The recent policy measure of easing foreign direct investment rules is also expected to bring more capital in the real estate sector. Encouraged by this, private equity funds are looking to leverage on this rising interest among foreign investors.
According to Rubi Arya, chief executive of Milestone Capital Advisors, “Offshore funds are showing interest in Indian real estate and there is lot of interest from FDI funds back in Indian real estate. We believe this is an opportune time to invest in Indian real estate, with rigorous risk management and strong asset management. We are planning to leverage further on our structured debt and commercial platform to raise money from offshore funds.”
Adding further she said, “FDI funds are looking to invest in pre-leased commercial assets, create strategic-level partnerships with reputed developers mainly through equity deals and make structured debt investments in residential projects”.
The JLL India report says that India-specific cumulative fundraising attained its peak in the pre-GFC period. During this period between 2005 and 2008, there were 50 such funds that raised $16 billion in total. However, post-GFC, only 29 funds got raised in five years, with cumulative fundraising of $3.9 billion.
The current investment period starting in 2014 has witnessed an increase in the volume of investments as well as the average investment size from $ 134 million to $ 184 million.
