Indian real estate funds flow worth US$ 8 billion

After the government’s relaxation of foreign direct investment (FDI) norms for the real estate sector in early 2005, the real estate sector has seen a foray of real estate fund launches. Sizable investments are expected to flow into these funds according to real estate services firm Jones Lang LaSalle (JLL).

Currently, these funds cater to institutional investors and high-net-worth individuals (HNIs). The HDFC India Real Estate Fund (HI-REF) was launched in 2005.

It was the first fund that gave individuals and institutions the opportunity to invest in multiple properties through a single-investment vehicle, with the minimum investment size of INR 50 million. JLL estimates that as much as USD 8 billion of private equity could flow into the Indian real estate funds over the next 18 to 30 months.

With factors such as long-term interest rates showing signs of alignment with the developed economies, strong investor sentiments, increasing rentals and improving transparency, the realty funds should continue to remain an attractive alternative investment vehicle for domestic and international investors.

In 2007, an estimated 50 million sq ft of new office space across the seven major metros is to be completed. This phenomenal growth in the commercial and residential real estate markets will further catalyse the growth of realty funds. Realty funds are expected to register double-digit returns on the back of these fast-growing investment options.

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