While realty funds are cautious, they are looking for future opportunities as well. Sovereign wealth fund of Gulf ADIA has invested in the offshore fund of Kotak Realty Funds -run by KotakMahindra Bank -to pump in $300 million (Rs 1,800 crore) on its behalf in the Indian real estate sector.
ADIA, owned by the Emirate of Abu Dhabi, has also appointed Aditya Bhargava, an India-dedicated investment manager, to look at options to invest in the country. Bhargava had earlier served as the managing director at SITQ India.
However, diminishing interest of private equity funds has led to a sharp drop in investment in this sector. Besides, slowdown in construction activities has left funds with fewer projects to invest in. According to Cushman and Wakefield, PE investments in real estate was at $276 million (Rs 1,638 crore) in first half of 2013, which is 46% lower than the first half of 2012: PEs had invested $514 million (Rs 3,050 crore) in the first half of 2012.
"PE funds continue to show keen interest in the market with a number of deals in discussion. This decline in the quantum of PE real estate investment was essentially due to less number deals (12 in H1 2013). Funds are looking at only embarking on projects with strong fundamentals," says Dutt. In June, Oman's State General Reserve Fund and the Government of Singapore Investment Corp (GIC), investment firm Temasek committed to invest $200 million in HDFC Real Estate Fund. These funds will primarily invest in residential projects and redevelopment in cities like Chennai, Pune, Bangalore, Mumbai and Delhi.
"The fund already has a deal pipeline across these cities and has a target net internal rate of return of over 20% with an average ticket size of 40-50 crore," said the person, who did not want to be named.
The Shapoorji Pallonji group has received commitment of $200 million (Rs 1,200 crore) from a Canadian Pension Fund in the $500-million realty fund of Shapoorji Pallonji Investment Advisors. The fund will invest part of its corpus in the development projects of Shapoorji Pallonji group, while at least 60% of the investments will be in external projects.
"As of now, there's a paucity of new quality deals in the market, and due to this, focus is shifting to refinancing than new deals. Almost all funds have had their learning over the last 5-6 years and are now very selective - looking for right opportunity and quality of projects. Transactions have almost dried up in the last 2-3 months," says an official of a realty fund.
In another such transaction, sovereign wealth fund Qatar Investment Authority (QIA) is investing $300 million (Rs 1,800 crore) in Bangalore-based real estate developer and South India's largest office space builder RMZ Corp. QIA will back RMZ to buy IT parks worth Rs 3,000 crore. Jointly, both partners will look at acquiring commercial spaces across Bangalore, Hyderabad, Chennai and Pune. RMZ has already identified the project and the money is expected to be deployed by March 2014.
ADIA, owned by the Emirate of Abu Dhabi, has also appointed Aditya Bhargava, an India-dedicated investment manager, to look at options to invest in the country. Bhargava had earlier served as the managing director at SITQ India.
However, diminishing interest of private equity funds has led to a sharp drop in investment in this sector. Besides, slowdown in construction activities has left funds with fewer projects to invest in. According to Cushman and Wakefield, PE investments in real estate was at $276 million (Rs 1,638 crore) in first half of 2013, which is 46% lower than the first half of 2012: PEs had invested $514 million (Rs 3,050 crore) in the first half of 2012.
"PE funds continue to show keen interest in the market with a number of deals in discussion. This decline in the quantum of PE real estate investment was essentially due to less number deals (12 in H1 2013). Funds are looking at only embarking on projects with strong fundamentals," says Dutt. In June, Oman's State General Reserve Fund and the Government of Singapore Investment Corp (GIC), investment firm Temasek committed to invest $200 million in HDFC Real Estate Fund. These funds will primarily invest in residential projects and redevelopment in cities like Chennai, Pune, Bangalore, Mumbai and Delhi.
"The fund already has a deal pipeline across these cities and has a target net internal rate of return of over 20% with an average ticket size of 40-50 crore," said the person, who did not want to be named.
The Shapoorji Pallonji group has received commitment of $200 million (Rs 1,200 crore) from a Canadian Pension Fund in the $500-million realty fund of Shapoorji Pallonji Investment Advisors. The fund will invest part of its corpus in the development projects of Shapoorji Pallonji group, while at least 60% of the investments will be in external projects.
"As of now, there's a paucity of new quality deals in the market, and due to this, focus is shifting to refinancing than new deals. Almost all funds have had their learning over the last 5-6 years and are now very selective - looking for right opportunity and quality of projects. Transactions have almost dried up in the last 2-3 months," says an official of a realty fund.
In another such transaction, sovereign wealth fund Qatar Investment Authority (QIA) is investing $300 million (Rs 1,800 crore) in Bangalore-based real estate developer and South India's largest office space builder RMZ Corp. QIA will back RMZ to buy IT parks worth Rs 3,000 crore. Jointly, both partners will look at acquiring commercial spaces across Bangalore, Hyderabad, Chennai and Pune. RMZ has already identified the project and the money is expected to be deployed by March 2014.
http://economictimes.indiatimes.com/markets/real-estate/news/foreign-investors-bullish-on-indian-realty-raise-rs-11854-crore-despite-scepticism/articleshow/21472535.cms?curpg=2
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