The real estate market in Bangalore attracted the maximum private equity (PE) investment in the country in the first half of 2014, beating the national capital Delhi as well as the commercial capital Mumbai, according to property consultancy firm Cushman & Wakefield.
Led by high demand for office spaces as well as steady demand for residential property, the city’s real estate market saw PE investments jump nearly 20 times yearon-year to Rs 2,005 crore. The city had received PE investments worth Rs 103 crore in the first six months of 2013.
While Mumbai received investments worth Rs 1,140 crore, Delhi-NCR got Rs 490 crore and Chennai Rs 200 crore during the same period. “Availability of investible leased office assets and stable yields kept the interest levels high,” said Sanjay Dutt, executive managing director, South Asia, at Cushman & Wakefield.
“The share in overall PE investments is expected to remain significant in the coming years for Bangalore,” he said, adding “Most of these assets have high occupancy rate and provide stable yields of approximately 9 per cent, making them highly attractive to investors.” Piramal Fund Management has just concluded a non-convertible debenture of Rs 100 crore with Century Real Estate Holdings against two projects in Bangalore. The deal was preceded by Tata Capital investing Rs 470 crore for about 15 per cent stake and a board seat in Shriram Properties and Vaswani Group raising Rs 100 crore from J P Morgan.
“It is easier to underwrite projects as the ticket size is reasonable in Bangalore,” said Khushru Jijina, managing director at Piramal Fund Management. “We close almost one or two transaction every month but there is reverse challenge of velocity that one has to be careful about.” Piramal Fund is looking to invest Rs 300-400 crore per deal in Bangalore compared with Rs 100 crore earlier.
Red Fort Capital is targeting midincome projects between Rs 60 lakh and Rs 4 core in Bangalore.
“While Mumbai and NCR is a high value and margin market, Bangalore is the most stable with demand driven by end users. The churn in capital is also faster as compared to other markets,” said Jasmeet Chhabra, managing director, Red Fort Capital.
Other funds looking for transaction opportunities in Bangalore include Milestone Capital Advisors, Motilal Oswal Private Equity, Xander, Shapoorji Pallonji and Blackstone. “We will invest 30-40 per cent of our total fund outlay in Bangalore market and are evaluating multiple transaction for our new Rs 500-crore fund that will be launched in coming months,” said Navin Kumar, ED, fund raising & investor relations, at Milestone Capital Advisors.
Source: The Economic Times