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SLUGGISH REALTY RIDING ON PE FUNDS

  There has always been a strong history of institutional investment in Indian real estate

through both mediums; direct ownership of property and pooled investment funds. Going

 back a bit in history, institutional real estate investments had dominated the sector and it was

during 199s that led to the emergence of strategic funds that were targeted to take the benefit

of falling property prices and hefty discounts. Thus, in the beginning of !1st century, private

e"uity in real estate came into picture as an independent asset class and has been

e#periencing a huge growth off late. $nd even though the real estate sector%s domestic front

looks dampened, the &' fund inflow has gained momentum riding high on the norms

fle#ibility government has provided over the last couple of years. This inturn is allowing the

Indian real estate sector to maintain a good balance of funds and is acting as a messiah in this

sector%s revival days.

('ven though the domestic demand has failed to meet the e#pectations of the sector,

international fund flow has ensured the upward side of the demand graph. Total private e"uity

investments from foreign funds in Indian real estate grew by over ) percent from !1* to

!1+, and in fact, this number shaped up much better in the first half of !1+ and even better

this year. I&&%s fle#ibility of norms and rela#ation towards entry-e#it barriers has done the

trick and the government%s decision towards allowing 1 percent I in construction will be

fruitful in years to come/, avers 0ano Gaur, &resident 23'$I4523 6 0, Gaursons

India 7td.

(or any foreign investor, India is a real potential market that promises long term returns.

8peaking about the real estate sector, government has provided a strong boost through its

 policy measures as well as mammoth infrastructural upgradation plans. ith such

announcements, private sector and primarily, international front will become e#tremely active

as plans are big and will yield greater returns in future. Tier 1 cities will have the biggest

chunk out of it and even last year itself, 003, 523 and :engaluru have in themselves

accounted for over percent of foreign &' investments/, e#plains 3aesh Goyal,

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environment to conduct business/, elucidates eepak ?apoor, &resident 23'$I4estern

=.&. 6 irector, Gulshan @omA.

Investments made during early !s and till the recession year, i.e. !B could not yield

good results, coupled with depreciating rupee by almost *+ percent over the last half a doAen

years had made investors largely hesitant. Cn the flipside though, in the upcoming *4+ years,

Indian residential real estate is proected to deliver almost 1 lakh units and thus there is a

huge scope for inflow of funds. (In the first "uarter of !1D, private e"uity investments rose

 by almost * percent at 3s. ),B* crore versus EoE F1 !1+, and here residential front took

the maority share. 'ven the overall funds inflow had grown by over ) percent in the first

"uarter, where even the number of deals closed rose significantly. 3ela#ation of I norms

and promise of better infrastructure along with hefty supply coming up are the real reasons

 behind this funds growth/, enlightens