This is but just the right time for PE investors to make investments in realty especially in those developers who have hoarded landbanks and are now finding it difficult to execute projects reeling under a severe cash crunch. MetroCorp, a Bangalore-based realtor, is reportedly close to raising $300 million (about Rs 1,400 crore) from leading global financial institutions, including Prudential Corporation Asia and Warburg Pincus. MetroCorp, a three-year-old real estate developer, has three projects under execution, and has lined up a bouquet of 21 projects across India, ranging from residential and commercial to integrated townships to special economic zones.
According to the investors in the Indian realty, most mid size developers, be it at the regional levels have taken over a lot of load. The developers have got more projects than they can execute. Century Group, another Bangalore-based land bank and real estate developer, mopped up $300 million from leading fund houses Goldman Sachs and Fortress.
There have been many real estate investments in Bangalore in the recent past.
Morgan Stanley's real estate investment arm made its entry into India with its first investment of about $68 million in a Bangalore-based realty firm Mantri Developers Private Ltd. Och-Ziff Capital Management Group, a leading global hedge fund, is believed to be picked up 25 per cent stake in Nitesh for $55-60 million. Red Fort Capital, a Cayman Islands-based real estate private equity fund, tied up with Bangalore-based Prestige Group for a $250 million township project, which will build 1,100 per sq feet mass housing (about 1,000 units).
Indian Realty Investments Touched $6bn In The last One Year
Even though there is a downturn in the commercial real estate market, the country’s real estate sector witnessed an inflow of about $6 billion from global private equity players during the last one year. According to a by global realty consultant Cushman & Wakefield (C&W), PE funds struck 79 deals in the country during August ‘07-August ‘08 amounting to $6 billion, a rise of 100% over the same period a year ago.
The amount received has been evenly distributed among SPV and portfolio level attracting a total investment of Rs10,000 crore each, while that of entity level was at about Rs6,970 crore, the report said. Bangalore and Hyderabad were the hot favourite of the PE investors attracting nine and six SPV level deals each.