Foreign private equity investors are eyeing the Indian
real estate market to buy properties from small and mid size developers
badly hit by the economic downturn. A clutch of big investors from the
EU and Middle East are expected to invest $400-500 million in distressed
land deals. These include Spain’s Nova Capital; Germany’s
SachsenFonds, Qatar based Barwa International and Al Aqueela, UK’s
Matrix Partners and Aberdean International. “In the next six months,
we will see lot of distressed real estate deals in India. Small and
medium developers with turnovers in the range of Rs 50 crore-Rs 250
crore will be forced to go for distress sales to sustain themselves
in the economic downturn,” said YEN Management Consultants managing
director, Sunil Shirole, who has been approached by such developers.
Small and medium size developers across the nation are said to be stuck
with 5-6 projects on average as demand has been sluggish. They plan
to sell 40 per cent of the existing projects at a discount of 25-40
per cent of the original price to fund rest of their projects. Shirole
said, “We could see 50 per cent of total real estate market coming
under distressed deals. As foreign PE players have the liquidity and
staying power, after buying such properties, they can wait 4-5 years
or till such time the property market rebounds to sell them at higher
price.” However, the outcome of general election can play spoilsport.
“A stable government is a prerequisite to these foreign investors.
If there are frequent changes at the Centre, they might turn their back
for another five years,” cautioned Arun Goel, CEO, DHFL Venture
Capital India.
