REAL ESTATE FINANCE STRATEGIES BALANCING STABILITY & GROWTH
Piyush Gupta, Managing Director - Capital Markets & Investment Services, Colliers recounted the NBFC crisis that led to new financial modes and structures coming in. “In India, more than 5 lakh units are stalled and delayed. With the IBC process there is some semblance that things are moving for good. We may have not achieved the desired results but the solutions are being initiated. Presently, fractional ownership and new AIF’s are penetrating the Indian real estate market. The business of investing in real estate is also changing with financiers getting a good sense of sales and leasing. Lenders are becoming allies and partners.” Tina Rawla- Managing Director, CFO & COO, Hines India was of the view that everything seems to be working in Indian real estate’s favour in terms of global and domestic investments. “India is emerging as an attractive investment destination for international institutional investors. To top it all external competition is decreasing due to geo-political events and the downturn in China. Anand Lakhotia- Director Real Estate, Motilal Oswal Alternates stated, “Post –covid, the established and credible builders have witnessed higher sales and are now making new project launches. Last year we saw a lot of acquisitions as well and therefore the rise in finance requirements too, across the country. Developers shouldn’t take risks based on trends. We have to approach residential underwriting with a lot of caution despite the prevalent upbeat scenario. What we look for is the capability to deliver to a certain standard, transparency, high governance standards and the ability to stick to the business plan.” Sharing developer’s perspective Sangeeta Prasad- Group CEO, Runwal Group added, “Real-estate has always been agile and evolving. Pivoting itself to new challenges. Prudence is the underlying theme and operational excellence has become important. The process between buying land for development and sales needs to have consistency and quality in place. The mix of agility and dynamism and standardisation and sustainability are the key to profitable ventures.” Anuranjan Mohnot- Co-Founder and MD, Gruhas & Lumos Alternate Investment Advisors Pvt Ltd concurred that with developers becoming prudent, underwriting has become easy. “In the last 7-8 years because of market consolidation, there are a handful of developers and the acquisition is happening at a relatively digestible valuation. Also the lenders have become more discreet in lending and overall, the market is improving for good. The foreign capital which has been invested in India is in income-building ready assets. They are happy with the yield of 6-8 percent and are averse to any development risks. The dispute resolution process in India is probably one of the worst and that is where the predictability of partners becomes very important. There is a need to strengthen the dispute resolution process.” Amit Goenka- MD & CEO, Nisus Finance Services Co Pvt. Ltd added, “Capital is the blood of the sector and it has grown tremendously in the last 2 years. Unfortunately, the supply has not grown that much. What is getting provided is getting cornered by a few which means there is a significant portion of stakeholders who are not getting capitalised and I don’t see that solving fast. Also, consideration should be the strength of the underlying and not just the overall financial strength. I don’t think global capital is interested in India’s story. The total amount of money available for residential development by the way of FDI is 25-30% of the total FDI. Most of the investments are happening in the commercial or warehousing sector, that are less risky being good return yielding assets. In residential, innovations have been tried like platform deals with large institutional capital providers. Raising own AIF and becoming an investment manager and the latest is the IPO.” India’s story remains intact despite the low investment inflow numbers reported in 2022. It was largely because of global investors re-thinking their investment strategy and holding out investment decisions but once that is out of the way capital will be back with vigour.
Tags : real estate finance strategies stability growth Piyush Gupta Managing Director - Capital Markets & Investment Services Colliers Tina Rawla- Managing Director CFO & COO Hines India Anand Lakhotia- Director Real Estate Motilal Oswal Alternates Sangeeta Prasad- Group CEO Runwal Group Anuranjan Mohnot- Co-Founder and MD Gruhas & Lumos Alternate Investment Advisors Pvt Ltd Amit Goenka- MD & CEO Nisus Finance Services Co Pvt. Ltd