Private Equity Funding, known as PE, has created a big opportunity for real estate builders and fascinating investors in real estate market. Big amounts of funds are geared up for investment opportunities in real estate market in expectation of a positive outlook and fresh funds to be allocated to this asset class. Indian Real estate has faced major transformations in last one decade and Private equity funds have contributed majorly on this part. PE is the source of capital to rejuvenate failing business and certainly real state market is a huge growth factor for job growth rate in the country. Moreover, Political stability along with continuous and focused efforts by the government strengthens economic revival and growth oriented interest by the global investor community towards India. Adding to it, relaxation in FDI norms, policy announcements and reforms to revive the real estate, establishment of Real Estate Investment Trust ( REITs) sparked the positive outlook for the project finance and real estate investment market.
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Since the sector have been going through a downfall and but now emerging gradually from its slowdown, it is creating a Big-Bang Universal opportunity for PE investors; no doubt opportunity for Project finance in real estate market is humongous.
Real estate market is a big contribution to the India GDP, and so investors are keen to avail the opportunity. It was one of the major reasons, in year 2015 many joint ventures being created between large investors and established developers.
Venture Intelligence studies shown many examples in the league of big investors and builders, example Standard Chartered invested Rs2,000 crore in Tata Realty. Another reason for gearing up is Land pooling, a provision introduced under Delhi Development Act 1957, where small chunks of land can combined together to build bigger infrastructure and a part of land is deducted as cost of building the infrastructure to reform bigger colonies.
Though the biggest issue yet to be resolved in the real estate capital markets is lack of liquidity in the debt markets. Certainly the positive outlook of Investors is much larger than current slowdown in real estate, which is of course coming out gradually.
Another point to be considered is FDI, for adding the ease for investment in real estate market; government has declared eased rules for Indian construction and built-up Infrastructure. It majorly covers building townships, built-up infrastructure, housing and construction development projects because these areas or sectors have huge and vast potential for increasing and improving employment in the country. These sectors directly influence ancillary industries such as steel and cement. The cabinet has approved Department of Industrial Policy and Promotion to relax the norms relating to FDI. It includes norms like minimum capitalization has been reduced from USD 10 million to USD 5 million. Another ease is the three year post completion lock-in period, where an investor can now exit on completion of the project and also even after the development of trunk infrastructure, such as construction of roads, water supply and drainage and so on.