Role that Private Equities will play in the Indian real estate market in 2017

- M Murali, Managing Director, Shriram Properties


With the new government at the centre, we are presently in the era of implementation of series of radical and transformational reforms and introduction of bills which aim at increased transparency, elimination of corruption and growth of digitalization. In the days ahead, we will see the Indian real estate sector to be still more transparent and credible with only organised and well self-governed players on the ground. But, at the same time the sector will be very attractive and rewarding to invest.

In the last decade developers with good governance, trust and transparency have redefined the lending mix and the pattern of funding to the real estate sector. The Indian real estate sector had seen a total funding of $5.4 billion in 2016 as against $3.8 billion five years ago. Of this, Private Equity accounts for 75% of total funding today. And, 70% of PE funding in the sector are by overseas investors.

Surely, with reduction in number of organised developers in the days to come with RERA, demonetisation and other reforms, and the good established players and brands not opting for expensive debt opportunities, PE participation will have a bigger role to play. More so with great the great investment opportunities the real estate sector unfold with Government laying thrust for affordable housing and Housing for all with private participation in a big way.

By substantially increasing their risk appetite, I am sure, PE funds with their pressure to deploy the funds mobilized and at the same time with the desire to play safe will be attracted by organised developers on the ground. No doubt, this situation will cast pressure on both entrepreneur and investors to perform as each one carry their own risk with thin margins. But this is good for the industry as well as for the investors