News: PE firms to raise Rs 20,000 crore for affordable, midsegment residential projects-23-03-2022
The smart recovery in the residential segment has led to the growth of investments. Half a dozen private equity firms focussed on the residential segment are on the road to raise a cumulative Rs 20,000 crore to deploy in the country’s affordable to mid residential segment
Half a dozen private equity firms focussed on the residential segment are on the road to raise a cumulative Rs 20,000 crore to deploy in the country’s affordable to mid residential segment. Some of the domestic and AIF funds that are being raised include ASK Property Investment Advisors, Motilal Oswal, HDFC Capital Fund, Kotak Investment Advisors, Gruhas Proptechand Lumos. “Demand for residential housing has revived after five years, and it’s time for private equity and AIF funds to help the industry grow faster. The sector needs patient and flexible long-term capital to ensure project completion, and we intend to provide the same through our funds,” said Sunil Rohokale, MD & CEO at ASK Property Investment Advisors (ASK PIA).
The fund launched its new real estate fund, ASK Real Estate Special Opportunities Fund-IV, and is targeting a corpus of Rs 1,500 crore for deployment in affordable and mid-segment residential and mix-use projects. Another prominent fund, Motilal Oswal Real Estate (MORE), has raised Rs 1,200 crore through the first close of its fifth real estate fund, India Realty Excellence Fund V (IREF V). The firm had expanded the fund size due to larger interest from investors. “Customers and investors who had stayed away from residential real estate over the last 4 to 5 years are returning to the sector. Interest rates on housing loans are at an all-time low, thus creating affordable synergies in the market,” said Sharad Mittal, director and CEO of Motilal Oswal Real Estate. Kotak Investment Advisors (KIAL) had raised Rs 2,770 crore in its 11th fund, which aims to invest in early-stage and late-stage real estate projects in residential, commercial, retail, warehousing and hospitality sectors. The smart recovery in the residential segment has led to the growth of investments in the sector. The residential sector attracted 2.3 times investments at $1.08 billion in 2021 compared to $460 million in 2020.
Looking at the yearly numbers, the residential sector has made a strong comeback in 2021. The year saw sales increase by 72% year-on-year, with around 128,000 units sold in the entire year. It reached nearly 90% of the preCovid 2019 sales levels. With good economic conditions and the festive season, developers aggressively launched projects,” said Samantak Das chief economist at JLL India. Other big funds have also been raised or are in the process of raising funds. HDFC Capital Fund achieved the initial close of its third fund of Rs13,500 crore focused on affordable housing. Investcorp, a global alternative asset management firm, has raised $130 million (Rs920 crore) in anchor commitments to provide last-mile lending for affordable and mid-market housing projects in India. PE fund Lumos and Gruhas Proptech plan to raise Rs500 crore to be used for last-mile funding and acquisition of stressed residential projects. The home buyer-led growth in the Indian residential segment is expected to be supported by capital flows from PE funds in the medium term. Residential real estate has witnessed a strong recovery post the lifting of lockdown in 2020, wherein almost all top cities are clocking record sales compared to previous years.
