Real Estate Needs Patient Long-Term Capital

Amit Bhagat, Managing Director and CEO, ASK PIA believes that the direct real estate investments are not advisable due to not-so-liquid nature of investments.

  What is your overview of the realty sector? Close ended private equity funds with proven track record through cycles are best to optimise risk return for high net worth individuals, family offices and institutional investors. Also, the real estate sector needs patient capital since monthly/quarterly debt servicing coupled with slowdown in sales and regulatory limitation on withdrawal of sales collection will not provide adequate funds for completing the project on time.   What have been the significant transformation in your company strategies? We target mid segment projects in growth corridors of top 5 cities with reputed developers with proven track record. We achieve financial closure of the project through a combination of patient long term capital and part dependence on sales during construction phase due to brand and credibility of the developer. The liquidity crisis since 2018 is a countercyclical opportunity to capitalise fully approved projects, thereby providing superior risk adjusted returns to investors. Our focus on asset management has been the backbone of our risk management framework which has ensured completion of projects as per committed timelines.   The novel consumer connect initiatives Entire asset management and investment team is accessible to investors to appraise on the performance of the investments and market conditions. Our quarterly communication provides detailed information about each aspect of the project. The disclosure standards of each investment in the fund have been consistent since inception and include details of approvals, construction status, sales in terms of pricing and no of units, micro market pricing, RERA approval details and actual site photographs etc.   What is the company growth outlook? We think the liquidity crisis since Sept 2018 and current pandemic will provide innumerable opportunities to private equity players, but understanding of risk and its management is critical. Declining interest rates will provide impetus to the sector going forward but transmission of interest rates by lenders holds the key. We plan to launch a new fund for meeting the increasing requirement of long-term patient capital for residential, commercial and mixed-use developments in growth markets of top 6 cities.