Just launched a fund to focus on residential sector in Bengaluru, Chennai, Delhi and Mumbai
INDIAREIT FUND today released an analytical study on the real estate sector in Bengaluru. This closely follows a Close-Ended Domestic Venture Capital Fund Scheme IV that was launched last month, focused on investing in the Indian Real Estate market.
As per the study; Real estate development in Bengaluru continues at a heightened pace despite a challenging economic environment. While property prices have fallen over the last one year, market players believe this to be a much needed correction to keep the sector attractive and within bounds of the investor/ occupier. Though, a sector-wide recovery seems to be on the way with a clear pick-up in demand levels during the last 3-4 months, questions on its sustainability remain. This recovery, however, would be dependent on the level of present and proposed infrastructure of the city
Commenting of the launch of this report, Mr. Ramesh Jogani CEO and MD of Indiareit said “INDIAREIT study reveals that while vacancy has been rising across the residential segment, budget housing projects launched during the last one year have reported resilient demand even during the downturn.”
Commenting on the focus of the fund which is on the residential sector in Bengaluru, Mumbai, Bangalore and Delhi, Mr. Jogani further added that “Established markets with proper civic infrastructure and employment opportunities providing firm demand. Residential is self liquidating asset with minimal exit risk due to strong pre sales, resulting in negative working capital for construction thus no leverage for the project.”
Commenting on his future strategy and specific plan for Bengaluru market, Mr. Jogani said, “We have been very active in the Southern Market. Our past investments in Bangalore and Chennai have given us great multiples. In Chennai we are focusing on the resilient residential sector, we plan to target mid segment housing with a price range of INR 2,800-3,200 at launch, catering to large untapped demand and keeping entry points low.”
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About Indiareit Fund Advisors Pvt. Ltd
The INDIAREIT Fund is a boutique real estate venture capital fund, promoted by Piramal Enterprises. The fund is registered under the SEBI (Venture Capital Funds) and has INDAIREIT Fund Advisors Pvt.Ltd., as its investment advisors. The Fund currently manages a total corpus of $450 million. This includes an Offshore Fund, wherein 3i one of the world's leading private equity & venture capital firms, is a cornerstone investor. Backed by some unique strength including a team which constitutes seasoned real estate professionals and prudent investment philosophy, Indiareit has created a strong niche within few years of its launch.
Annexure 1 – Track Record of Indiareit
- Fund with US$450m corpus and more than 47m sq. ft. of area under development
- Proven track record of deployment; Healthy valuations despite market slowdown
- Relationship Reinvented
* Trusted by over 5,000 investors globally
* Distributed by most leading private banks in India
* Partnered with 8 leading local developer - Fund Structuring
* High target return; focused investment strategy
* Pro-active in introducing new features such as liquidity pool, third party mortgage facility, lower fee slabs, portfolio level distribution and drawdown holidays
* First to declare independent valuation; regular reporting to investors via newsletters, whitepapers etc. - First Indian Fund to complete exits in investee projects
* Maiden investment in residential project (Signature Island) exited in Sept. ’08 with 2.22x net money multiple
* Partial exit of second investment (Bangalore Retreat) translating into 2.30x net money multiple - Nearly 35% of first domestic fund to be returned within 3 year of launch, from just 1 exit out of 12 projects
- Work commenced on majority projects
*Visible activity on all major sites; On track execution and delivery
Annexure 2 – Summary of the real estate report of Bengaluru
Bengaluru Real Estate Report - 2009 (Executive Summary)
- Real estate development in Bengaluru continues at a heightened pace despite a challenging economic environment. While property prices have fallen over the last one year, market players believe this to be a much needed correction to keep the sector attractive and within bounds of the investor/ occupier
- Though, a sector-wide recovery seems to be on the way with a clear pick-up in demand levels during the last 3-4 months, questions on its sustainability remain. This recovery, however, would be dependent on the level of present and proposed infrastructure of the city
- IndiaReit and DTZ present a detailed market assessment study, across various real estate segments, in ‘Bengaluru Real Estate Report 2009’
‘Bengaluru Real Estate Report 2009’ takes a comprehensive look at the city of Bengaluru to analyse its real estate sector. The report covers four real estate segments, which are:
- Residential
- Commercial
- Retail
- Hospitality
* Key findings of the report are as follows:
- Residential stock (grade A) in the city has doubled during the last four years. More than half of this is located in the south and east regions of the city. The city continues to add more than 10,000 new housing units every year. North Bengaluru has emerged as a prominent residential market with large under-construction/proposed supply in next few years. The shifting of the Airport and subsequent improvement in infrastructure has been the primary driver of this trend
- While vacancy has been rising across the residential segment, budget housing projects launched during the last one year have reported resilient demand even during the downturn
- In the office space, Bengaluru is the largest market in India with 73.8 mn sft of existing stock. High vacancy (22%) in existing stock and a large development pipeline continue to put supply side pressure on the office segment
- More than 60% of the stock is located in peripheral regions of the city (far from city center). This is ideal for the city as real estate costs in these locations are low and suits the IT/ITeS industry, which is the prime driver of office space demand in the city
- Developers are expected to rationalize new supply, by delaying project completions and rolling back announced projects. We therefore expect the development pipeline to significantly reduce over the next one year period
- The first signs of a probable recovery in the segment were reported during the quarter ended June 2009 with rise in absorption levels (1.1 mn sft, a 50% increase over the preceding quarter)
- The city’s infrastructure requires urgent attention and investment to keep up with the overall pace of real estate development. The commissioning of the new state-of-the-art airport has significantly improved its reputation. Proposed infrastructure projects, including metro and road development plans, could provide the next level of infrastructure push in the city