Residential property in India is expected to receive $1 billion investment this year, given its attractive rate of returns averaging at a high of 20-22 per cent per annum, an industry expert said in Singapore on Tuesday.
“Private Equity funds in Indian real estate sector has already raised $420 million in the first two months of this year, compared to $520 million for the whole of last year,” said Rubi Arya, executive vice-chairman of the Mumbai-based Milestone Capital Advisors.
Mid-segment housing and affordable housing can take returns to as high as 20-22 per cent per annum through hybrid investing, that is capital security plus equity upside, she said.
“We feel that with the Real Estate Bill mandate, availability of deals for Private Equity firms will certainly go up,” she said, adding that the reforms in the real estate sector will also help further accelerate fund raising and investment opportunities both for residential and commercial sectors.
“With such positive developments, the India story is growing by leaps and bounds and it is just a matter of time when this sector begins its upward journey once again, albeit after a prolonged period of gloom,” she added.
Costs on real estate construction are seeing stability with fuel prices down, which leaves developers with overall margins for positive growth.
“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 Non Resident Indians (NRIs) and Foreign Direct Investments towards Indian real estate,” she noted.
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.
Milestone manages $800 million or 25 million sq ft residential, warehousing, commercial and office spaces since it began operating as PE funding concern in 2008.