Four large property developers have seen equity investments/commitments of Rs 7,567 crore by foreign funds in the current calendar year, about three times the amount raised by in CY 2014.
Last year, two developers raised Rs 2,500 crore, including a fund floated by Peninsula Land and Brookfield to provide debt to other developers, said a report released by Kotak Securities on December 28.
The 2015 equity investments/commitments include the Rs 2,700 crore Piramal Realty, part of Ajay Piramal group, got from Warbug Pincus and Goldman Sachs at the entity level; Rs 1,250 crore raised by Shapoorji Pallonji from ADB, IFC and Standard Chartered; Rs 1992 crore raised by DLF from Singapore's GIC in two of projects and Rs 1625 joint venture between Warbug Pincus and Embassy Developers for warehousing projects.
In comparison, the year 2013 saw equity deals of Rs 3,550 crore which was mostly platform or joint ventures between developers and global investors, the report said. In 2013, Godrej Properties, Mahindra Lifespaces, Brigade did platform deals with dutch fundhouse APG, Standard Chartered and Singapore's sovereign fund GIC respectively.
Besides, the year 2015 saw total PE investments of Rs 18,300 crore in real estate in the first nine months, the highest ever since 2008, according to consultancy firm Cushman & Wakefield.
Amit Bhagat, CEO & managing director of property fund manager ASK Property Investment Advisors termed the FDI commitments in 2015 as a "welcome relief".
"The actual invested amounts are lower since these are commitments but eventually investments will follow. The sector has been receiving only debt in last few seven years whereas need of the hour is equity," Bhagat said..
"The commitments are at platform level and enterprise level to begin with but it reflects the shape of things to follow. Excess of debt money has led to deterioration in quality of real estate paper and hence foreign investors with deep pockets and longer duration money have started looking at equity investments," he added.
The Kotak report said larger developers are getting equity investments. While bigger ones are signing equity JVs with global investors, smaller companies are doing JVs with larger ones.
Nearly 60 per cent of the tie-ups have happened in FY2016 alone, compared to those between FY2004- 15, the report said.
"More and more land owners / corporates are now tying up with / selling their land parcels to larger (and branded) developers. In fact, small developers and large ones in distress have offered more partnerships to branded developers in the recent past, than in before," Sarda said in the report.
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