Mumbai: With international investors including private equity firms and sovereign wealth funds showing active interest in residential realty projects in India, leading developers are expected to have a steady pipeline of new launches in the coming months.
Global investors who had earlier restricted their investments to commercial real estate space have now started looking at residential projects more favourably.
According to Shubham Jain, vice-president of ICRA, tie-up with international investors would help real estate developers build a healthy launch pipeline.
“The stress in the industry has made available ample investment opportunities in the sector at attractive rates. With over $2 billion of capital commitment expected under various platforms, the leading developers would be able to acquire new projects thus ensuring a steady launch pipeline over the medium term. Moreover, the equity nature of such partnerships would reduce the burden of providing any committed exit to partners,” he said.
The investment is typically routed through the project special purpose vehicle (SPV), with the costs and profits to be shared by the partners in a pre-determined manner as per their respective economic interests.
While such partnerships have been largely limited towards leading developers,an analysis of the recent private equity investments in the sector by rating agency ICRA showed that the mid-rung developers have attracted investments in the forms of debt or structured instruments which allow for profit-sharing with pre-defined minimum returns.
