Real Estate Valuations Sky High, PE Funds Complain
Real estate project developers have upped their prices drastically and private equity funds are not liking it anymore. Nipun Sahni, India country head for the property arm of GE Commercial Finance, said at a conference in Singapore, “There’s a valuation mismatch. How much future growth can you price in today? Every Indian company can be worth billions of dollars.”
Similarly, Kurt Roeloffs, Asia chief executive of RREEF, the property asset management arm of Deutsche Bank , also blamed high valuations as well as FDI regulations as obstacles. Reoloff said that the market was skewed because many foreign funds had set up shop as venture capital funds, which is more flexible because it lets investors divest within three years. “Now the window’s too narrow and it’s forcing a huge amount of money on certain developers, certain regions and creating imbalances,” he said.
Sahni Still Upbeat
Another bit of news is that Sahni of GE Commercial Finance is looking at partner developers in Bangalore and Hyderabad. “I have a hunch real estate will have bumps and cracks in micro markets, but you’re literally creating a new country. After the Moguls and the Britishers there’s been no building,” he said. “You have to create places for people to work, live and shop.”
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