India has been over-sold for years, with observers exaggerating its
boundless opportunities. Now, perhaps, a greater common sense
applies. Foreign institutional investors all “lost their pants” in the
first wave in Indian real estate investment. The second wave has hung in
there and survived.
That’s according to Nimesh Grover partner, real estate management at IDFC Alternatives. “Senior debt is priced higher than equity," he adds. "Now there is more sanity in people’s desire to go out and build. Absorption of space has exceeded supply, for the first time in many years. Indian developers have a financing disorder, they are always stretched financially. It is a bit like an eating disorder. Those who haven’t succeeded in the past now have to look for a new sucker, and their cost of capital is higher.”
Not so long ago, 50 managers were selling real estate funds on the back of positive news stories. Few ever round-tripped a fund and just a handful of these managers now remain. In the first wave they saw big equity deals that had a long gestation period. Today there are more debt investments and de-risked transactions.
“Investors who are prepared to peel the onion and understand the risks can see that India is great from a risk/return perspective,” says Subhash Bedhi, managing director of Red Fort Capital. “I’ve seen more investors in the last four months than in the previous two years and they are prepared to spend a week or two in the country, meeting managers and seeing sites.”
In his opinion, in the short term, the volatility of the currency is the biggest investor risk. Rupee denominated property funds are considered the next biggest development in the Indian real estate market, which is still overshadowed by Government bureaucracy.
Sourav Goswani, managing director of Walton Street India Real Estate Advisors agreed with the problems of bureaucracy. “Today the biggest risk is picking partners and getting approvals through. Once a building starts to come out of the ground, it all becomes a lot more predictable. Nevertheless, if developers don’t work with the funds and don’t run a transparent operation, everyone finds out as the funds all talk to one another and share anecdotes. Developers have become more savvy about due diligence and we increasingly see them hiring top law firms to represent them.”
Source:http://www.siliconindia.com/realestate/news/Real-Estate-Evolution-in-India-Realty-in-India-Market-nid-142922.html
That’s according to Nimesh Grover partner, real estate management at IDFC Alternatives. “Senior debt is priced higher than equity," he adds. "Now there is more sanity in people’s desire to go out and build. Absorption of space has exceeded supply, for the first time in many years. Indian developers have a financing disorder, they are always stretched financially. It is a bit like an eating disorder. Those who haven’t succeeded in the past now have to look for a new sucker, and their cost of capital is higher.”
Not so long ago, 50 managers were selling real estate funds on the back of positive news stories. Few ever round-tripped a fund and just a handful of these managers now remain. In the first wave they saw big equity deals that had a long gestation period. Today there are more debt investments and de-risked transactions.
“Investors who are prepared to peel the onion and understand the risks can see that India is great from a risk/return perspective,” says Subhash Bedhi, managing director of Red Fort Capital. “I’ve seen more investors in the last four months than in the previous two years and they are prepared to spend a week or two in the country, meeting managers and seeing sites.”
In his opinion, in the short term, the volatility of the currency is the biggest investor risk. Rupee denominated property funds are considered the next biggest development in the Indian real estate market, which is still overshadowed by Government bureaucracy.
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“You have to
operate in spite of the Government,” said Vaibhav Rekhi partner at India
REIT Fund Advisors. “Its one thing getting an exit, but repatriating
the money is extremely hard and that’s my pain point, and where I’d like
to see the Government offering more help.”Sourav Goswani, managing director of Walton Street India Real Estate Advisors agreed with the problems of bureaucracy. “Today the biggest risk is picking partners and getting approvals through. Once a building starts to come out of the ground, it all becomes a lot more predictable. Nevertheless, if developers don’t work with the funds and don’t run a transparent operation, everyone finds out as the funds all talk to one another and share anecdotes. Developers have become more savvy about due diligence and we increasingly see them hiring top law firms to represent them.”
Source:http://www.siliconindia.com/realestate/news/Real-Estate-Evolution-in-India-Realty-in-India-Market-nid-142922.html
The real estate market in India is on boom. You will see
ReplyDeleteconstruction is going everywhere in India such as in Delhi, in Pune, Bangalore.
You must be agree with it that Delhi has become first choice of many people to
live. This is the reason many real estate construction is going on in Delhi .
Commercial Property in Delhi