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Real estate consulting firm Cushman & Wakefield has entered the debt financing services, which will include private and public funding.
“With this, the current portfolio of financial services has been expanded to include private funding, investment sales as well as public sector funding,” Sanjay Dutt, Executive Managing Director - South Asia, Cushman & Wakefield said.
Cushman is the first international property consultant to enter this segment, Dutt said, adding it will service the real estate requirement across sectors such as infrastructure, engineering procurement & construction (EPC), hospitality, healthcare and education among others.
The real estate sector has been reeling under high debt with one of the big developers, DLF, recording a debt of around Rs 23,000 crore as of September 30 last year. The company said it would bring down its net debt to Rs 18,000 crore by the end of March 2013 by selling its several non-core businesses. Unitech reported a debt level of Rs 5,421 crore, and Housing Development and Infrastructure Rs 3,467 crore as of December 31, 2012.
“Increasingly, developers are looking at ways to reduce debt cost. There is always a possibility for re-negotiation in the loan rates or restructuring of loans. And PSUs offer lower rates of interest for a longer period, which makes them quite attractive. Seeing the developer’s entire portfolio – property/land/building, we will able to offer them the best solutions. Our role would be akin to financial advisors,” Dutt added.
The international firm has already been able to strike deals for structured debt worth Rs 300-400 crore since January, with deals for another Rs 500 crore in the pipeline, he said.
It is estimated that the total market is around Rs 2,000-3,000 crore per annum. The new service will be able to offer varied options to developers for raising debt, keeping in mind the significance of cost effectiveness.
According to Dutt, “This widened capability in debt and equity advisory will allow us to offer a full investment bank style service to clients which supports our traditional capital markets and land industrial activities in asset disposition, structured sale and sale/leaseback services - a preferred one stop shop for real estate capital markets activities throughout India.”
Seeing the real estate demand a few years back, developers went on a land buying spree and announced projects simultaneously. However, the demand dipped which coupled with high interest rates resulted in high debt for developers.
