PE Players Line Up Investments in Indian Real Estate
Mumbai, India - The Indian real estate market is poised for significant growth, with a projected 35-40% increase in value terms over the next two years. This upward trajectory has caught the attention of private equity (PE) players, who are gearing up to invest nearly $12 billion collectively in various segments, including residential, commercial, townships, hotels, and more.
Key Investments on the Horizon
- Red Fort Capital Advisors: Preparing to invest approximately Rs 3,500 crore, with a primary focus on developing a chain of budget hotels through partnerships with local developers.
- Starwood Capital: Committing Rs 800 crore to Chennai-based Shriram Properties, with plans to develop a 300-acre township in Kolkata, requiring an estimated investment of Rs 5,000 crore.
- Deutsche Bank: Facilitating a Rs 1,500 crore raise for Suncity Projects.
- The Blackstone Group: Investing around $18 million (approximately Rs 73 crore) in Synergy Property Development Services, with further opportunities being explored.
Expert Insights
'Our strategy involves developing a budget hotel chain by collaborating with local developers, anticipating around 400 budget hotels with 60,000 hotel rooms across India,' noted Kuldeep Chawla, Director, Red Fort Capital.
Arun Natarajan, Founder & CEO, Venture Intelligence India, which tracks the PE segment, observed, 'Following SEBI's opening of the real estate market to PE investments in 2006, the first year was more about learning. The subsequent year witnessed a market correction, leading to more incremental growth, where stock market money flowed into special purpose vehicle-level investments.'
Balaji Rao, Managing Director, Starwood Capital, highlighted, 'Beyond our partnership with Shriram Properties for a Kolkata township, we also see potential for further investments in the Indian market, especially considering the anticipated need for $18-20 billion in investments by FY09 and FY10.'
According to Jayesh Kariya, Partner, Deloitte Haskins & Sells, 'With global Real Estate Investment Trusts (REITs) making investments of $1,400 billion, more global investors are likely to turn their attention to the Indian realty sector.'