‘Res­i­den­tial Re­alty Re­mains Best As­set Class for In­vestors’

At­tracts 56% of over­all in­vest­ment in first half of 2017, says a JLL In­dia re­port

The Economic Times - - Companies: Pursuit Of Profit -

Kailash Babar & So­bia Khan

Mum­bai | Ben­galuru: Res­i­den­tial real es­tate has re­mained the most favoured as­set class for in­vestors as the seg­ment at­tracted 56% of the over­all in­vest­ment in the first half of this year. Res­i­den­tial projects, in­clud­ing town­ships across In­dia, re­ceived in­vest­ments worth .₹ 9,000 crore, more than dou­ble the funds at­tracted by of­fice and com­mer­cial projects, showed a JLL In­dia re­port. Such amount of in­vest­ments in­clude eq­uity and debt in­vest­ments from both do­mes­tic and for­eign in­sti­tu­tions.

“The of­fice as­set class saw lower in­vest­ment in the first half of 2017 com­pared with a year-ago pe­riod due to a lower num­ber of eq­uity deals. The res­i­den­tial seg­ment, on the other hand, has cor­nered more than half the to­tal in­vest­ments dur­ing this pe­riod, thanks to the grow­ing con­fi­dence among in­sti­tu­tional in­vestors ow­ing to pol­icy re­forms,” said Shob­hit Agar­wal, man­ag­ing di­rec­tor, cap­i­tal mar­kets and in­ter­na­tional di­rec­tor, JLL In­dia.

While Real Es­tate (Reg­u­la­tion and Devel­op­ment) Act, 2016 (RERA) and Goods and Ser­vices Tax (GST) have al­rea- dy been im­ple­mented, de­mon­eti­sa­tion as well as the Be­nami Prop­erty Act prom­ise to make res­i­den­tial real es­tate far more trans­par­ent than it was ever be­fore.

In one of the largest in­vest­ment trans­ac­tions that took place dur­ing the quar­ter in­cluded Pi­ra­mal Fund Mana- ge­ment ex­tend­ing a loan of .₹ 1,800 crore to Lodha De­vel­op­ers. In an­other deal, Sare Homes raised .₹ 435 crore from Altico Cap­i­tal and KKR for a Gur­gaon town­ship project.

Ac­cord­ing to ex­perts, the pref­er­ence for in­vest­ment is led by the de­mand for homes with bur­geon­ing mid­dle class in the coun­try and the push for af­ford­able hous­ing.

“While ev­ery­body’s bullish about of­fices due to the de­mand-sup­ply sit­u­a­tion, we also need to con­sider that mort­gage to GDP ra­tio in our coun­try is less than 10%, which im­plies that the res­i­den­tial story will go on for the next 20 years and there­fore, will con­tinue to at­tract cap­i­tal. We have started see­ing more eq­uity-ori­ented deals in res­i­den­tial space than debt. In­vest­ment trans­ac­tions for of­fice prop­er­ties have usu­ally been lumpy and there­fore, a sin­gle of­fice deal can skew the sta­tis­tics in In­dia,” said Am­bar Ma­hesh­wari, chief ex­ec­u­tive of­fi­cer, Pri­vate Eq­uity, In­di­a­b­ulls As­set Man­age­ment Com­pany. On Wed­nes­day, the Re­serve Bank of In­dia re­duced the repo rate by 0.25 ba­sis points to 6%, which is ex­pected to help en­hance home­buy­ers’ affordability and re­vive de­mand for hous­ing. Ac­cord­ing to ex­perts, the move is likely to im­pact sales pos­i­tively in the up­com­ing fes­tive sea­son.

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