The woes of the real estate sector are far from over. It will continue to get most of its private equity (PE) funding from funds specifically focused on real estate, especially in residential segment. Sector agnostic private equity funds will invest in residential real estate with caution.
Jones Lang LaSalle India's Segregated Funds Group closed its first real estate fund in India - Residential Opportunities Fund-I (ROF-I) - at Rs 160.75 Crore. Like most real estate focused funds, Scheme ROF-I too is registered with SEBI under the new Alternate Investment Funds (AIF) regulations. The fund's focus is to invest in small residential projects in prominent locations across seven - Delhi NCR, Mumbai Metropolitan Region, Bengaluru, Chennai, Kolkata, Hyderabad and Pune.
The last 10 to 12 months have seen a majority of rupee denominated funds, especially in real estate. Fund raising in foreign markets has been muted.
The new AIF regulations raise the minimum investment amount to Rs 1 crore from the earlier limit of Rs 5 lakh, this will clearly be the differentiator between retail and long term investors.
There will be more of sophisticated investors and specialised investment themes in the days ahead. The themes will be closer to what an investor wants - capital appreciation, liquidity and due market diligence will be paramount. There will be considerable interest in smaller projects. Investment themes will follow the investor's strategy to generate quicker and regular returns.
By -Sarika Malhotra
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