Real estate to see Rs 1,600 cr investments

Prominent global private equity funds are gearing up to pump in Rs 1,000-1,600 crore into the Indian real estate market over the next three to six months.

These funds, which earlier delayed their entry into India by a year, are aggressively planning to scale-up their investments in a very short period.

Real estate funds which are queueing up to invest in India include Black Stone (among the top private equity funds in real estate from the US), Morgan Stanley, Merrill Lynch and Maia Fund, a fund floated by Silicon Valley entrepreneur Malini Ales.

"These funds are looking at investments in southern cities like Bangalore, Hyderabad and Chennai. But have primarily set eyes on Bangalore where the rate of return is much higher than Mumbai and Delhi at 12-15 per cent," said Mahesh Laxman, associate director, Chesterton Meghraj, international property consultants.

The entry of these funds is likely to impose a challenge to the domestic real estate market.

"Quality and credibility of real estate projects will be under strict scrutiny and this will also definitely raise the benchmark of future projects," said Shivram Malakala, executive director, Habitat Ventures.

According to Manisha Grover of Jones Lang LaSalle-India, with the entry of these funds, liquidity in the market will get impacted and more secondary transactions will happen.

"Since the funds have exposure to developed markets globally, they will bring in best practices in project evaluation which will definitely impact fundamentals of the real estate market," she added.

"Funds are planning to spread their risk by investing in retail, commercial and residential projects with three years completion time lines," said Laxman.