PUNE: The unbridled influx of professionals and a local economy, which
is relatively less affected by the economic downturn, has renewed
interest of private equity players in the city's
real estate sector like Emaar MGF, DLF, IREO etc like big gaints.
ensured
a steady demand for homes and offices in the city. This has helped
induce a high interest among private investment firms in the developer
companies.
Private equity
investments in Pune's realty space bounced back with a 300% jump to Rs
1,464 crore during 2013, a research report by Cushman & Wakefield
has said. "With growing housing demand, investments in the right project
have the potential to yield healthy returns," the report added.
Importantly,
Pune has bagged a fifth of the Rs 7,000 crore total inflows from
private equity funds (13% higher than the previous year) in the
country's real estate sector for the year. The increase in private
equity inflows was primarily due to rising investments in residential
assets and other sectors like retail and hospitality, the report said.
"While the number of deals has increased to 40 in 2013 compared to 34 in
2012, the average deal size has declined marginally to Rs 175 crore
($28 million)," the report added.
Other factors encouraging
private investors include likely entry of real estate investment trusts
(REITs), reducing fiscal deficit and expectations of fall in inflation
and a pick up in GDP growth post the Lok Sabha elections, the report
noted.
Sanjay Dutt, executive managing director for South Asia at
Cushman & Wakefield, said, "The residential asset class continues
to provide tremendous potential for growth in the coming years. With
housing requirements growing across cities and funds investing in the
asset class, primarily in the form of non-convertible debentures,
providing fixed returns, investments in the right project have the
potential to yield healthy returns."
Anuj Puri, country head and
chairman of real estate advisory company JLL India, said investors are
enthusiastic about India as a vast army of young, educated Indians is
set to turn the world's second most populous country into a talent
powerhouse. "The consumer base is growing fast as a swelling middle
class comes online;
Come 2030, India will have 68 cities with
population of more than 1 million, 13 cities with more than four million
and there will be six megacities of 10 million plus. This will provide
the country with huge opportunities," he said.
Rohit Gera,
managing director of Gera Developments, said, "Given the RBI's stance on
disallowing banks from lending for land acquisition, the sector
requires funds from alternative sources. The first round of FDI in real
estate brought poor returns to foreign investors, given the 2008
meltdown as well as the steep fall in the value of the rupee. It is
heartening to see the confidence of foreign investors in the real estate
sector. There is no doubt as to the demand and desire to own real
estate by millions of Indians. To meet this demand additional capital is
necessary and this capital in the form of FDI is a welcome step."
Rahul
Paranjape, executive director of Paranjape Schemes Constructions
Limited (PSPL), said good quality commercial space in key business
districts has attracted investors as they offer attractive and steady
returns. PSPL has developed a special economic zone (SEZ) in its
township Blue Ridges in Hinjewadi. "The SEZ is fully leased and IDFC
Alternatives has invested Rs 250 crore to acquire the entire ownership
in it," he said.
Vishwajit Zawar, director of Marvel Realtors,
said he has shared 30% equity in his project Edge to Capital First for a
consideration of Rs 100 crore with agreed rate of return. "The project
is selling fast and we have actually begun redeeming the equity stake of
Capital First," Zawar said.
Sachin Kulkarni, managing director,
Vastushodh Projects, said, "Investment of Rs 40 crore by Avenue Venture
Capital in our project Anand Gram is the first PE funding in affordable
housing segment. They have already disbursed Rs 20 crore and the
remaining amount shall be disbursed within next three months. There is
an exit route in equity buy back at the end of 36 months at a fixed rate
of return."
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