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There has always been a strong history of institutional investment in Indian real estate
through both mediums; direct ownership of property and pooled investment funds. Going
back a bit in history, institutional real estate investments had dominated the sector and it was
during 1990s that led to the emergence of strategic funds that were targeted to take the benefit
of falling property prices and hefty discounts. Thus, in the beginning of 21st century, private
equity in real estate came into picture as an independent asset class and has been
experiencing a huge growth off late. And even though the real estate sectors domestic front
looks dampened, the PE fund inflow has gained momentum riding high on the norms
flexibility government has provided over the last couple of years. This inturn is allowing the
Indian real estate sector to maintain a good balance of funds and is acting as a messiah in this
sectors revival days.
Even though the domestic demand has failed to meet the expectations of the sector,
international fund flow has ensured the upward side of the demand graph. Total private equity
investments from foreign funds in Indian real estate grew by over 30 percent from 2014 to
2015, and in fact, this number shaped up much better in the first half of 2015 and even better
this year. DIPPs flexibility of norms and relaxation towards entry/exit barriers has done the
trick and the governments decision towards allowing 100 percent FDI in construction will be
fruitful in years to come, avers Manoj Gaur, President CREDAI-NCR & MD, Gaursons
India Ltd.
For any foreign investor, India is a real potential market that promises long term returns.
Speaking about the real estate sector, government has provided a strong boost through its
policy measures as well as mammoth infrastructural upgradation plans. With such
announcements, private sector and primarily, international front will become extremely active
as plans are big and will yield greater returns in future. Tier 1 cities will have the biggest
chunk out of it and even last year itself, MMR, NCR and Bengaluru have in themselves
accounted for over 70 percent of foreign PE investments, explains Rajesh Goyal, Vice
President CREDAI-Western U.P. & MD, RG Group.
Infrastructural developments in a country serves as the backbone for its realty sector and this
is exactly where India is standing out as a strong market. At the same time, having a policy
framework that supports and promotes ease of doing business especially for foreign nationals
play a vital role towards attracting foreign funds. PE funds inflow has been on a constant
rise and will continue as India promises infra development on a large scale and the
government eases the ways of doing business. Conditions of area restriction of floor area of
20,000 sq. mtrs. and minimum capitalisation of $5 million required within six of
commencement of business had been removed and since then a lot of FDI has flown in.
Another important element that has come up and will act as a catalyst is the implementation
of Real Estate Act. Foreigners transacting in India will now have a much secured