Indian residential segment to attract over Rs. 6,000 cr PE investments

Private Equity (PE) investments in Indian real estate sector have already raised $420 million in the first two months of 2016, as compared to $520 million for the whole of last year. Given its attractive rate of returns averaging at a high of 20-22% per annum, industry experts believe that Residential property in India is expected to receive $1 billion (Rs 6652.75 crore) investment this year. Mid-segment housing and affordable housing can take returns to as high as 20-22% per annum through hybrid investing, that is capital security plus equity, explains Rubi Arya, executive vice chairman of the Mumbai-based Milestone Capital Advisors Ltd.

With the Real Estate Bill mandate, availability of deals for Private Equity firms will certainly go up as Investors can look forward to far higher transparency and ease of doing business with developers. The reforms in the real estate sector proposed in the Union budget will also further accelerate fund raising and investment opportunities both for residential as well as commercial sectors.

With the government permitting NRI investments into domestic Alternate Investment Funds, The availability of foreign capital will naturally increase. Further, The Real Estate Investment Trusts (REITs) will soon start seeing listings by developers consequently lifting the commercial real estate market to a highly profitable investment option.