Private equity funds boost real estate market
Private equity funds boost real estate market
>From Business-Standard.com
The real estate market in India is driven by Asian real estate
funds, Singapore developers and domestic private equity funds
dedicated to real estate, according to Mridul Upreti, head,
corporate finance and investments at Jones Lang LaSalle.
However, new players |are rapidly emerging among US opportunity
funds, UK private equity and venture capital firms. "This
increased institutional investor interest is expected to push
the market to higher 'efficiency' levels," he added.
With this investor interest in India, Jones Lang LaSalle expects
exponential growth in foreign investments across four to five
key markets. The focused areas are suburban business parks,
large residential schemes, and city centre mixed-use schemes
with hotel/serviced apartment components.
There could be further acceleration of investment interest in
shopping centre development projects in India, in the wake of
the expected easing of foreign investment rules in the Indian
retailing industry.
"The clearance of the proposal for 100 per cent foreign direct
investment (FDI) in construction and development projects in
India, which was announced early this year has given a boost to
foreign investments in the country," said Upreti.
Global investment in real estate increased by 12 per cent to
$457 b in 2004 (on 2003) according to a report published by
Jones Lang LaSalle (Global Real Estate Capital - Travelling
Further to Return Stronger). Of this, Asia Pacific accounted for
11 per cent at $48.3 b.
The Asia Pacific investment is a 74 per cent increase over 2003.
Of this, 24 per cent came from cross-border investment, which
has grown by over 146 per cent to reach $11.5 billion, said
Richard Johnson, managing director of Asian Capital Markets
Group at Jones Lang LaSalle.
The bulk of the cross-border activity came from North American
investors who traded $5.1 billion of assets and invested a net
$700 million in the Asia Pacific region. Amongst all the real
estate sectors, the office market was the most highly traded
asset, accounting for 45 per cent of all capital market flows in
Asia Pacific.
According to Johnson, "The globalisation of real estate
investment is more than simply an extension of booming local and
regional investment markets or a 'theme for the medium term'. It
is here with us, now, and we believe it is here to stay. Not
only is there a vast weight of capital flowing between regions,
sophisticated global investors are exerting an increasingly
significant influence on local markets through competition with
domestic and regional players."
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