Private Equity firms’ narrowing down of investment options is good, says Shubhkamna Advert

Dwindling market conditions in the real estate sector have ushered in a new scenario with regards to the investments.   Private Equity firms’ fund raising and investment in real estate sector is more converged towards residential segment. Shubhkamna Advert finds that this is an approach contrary to the earlier preferred method of investing in diversified segments of real estate.

Citing a report by JLL India, Shubhkamna Advert reviews the current scenario and remarks that there has been a discernible change of focus among investors pertaining to their investments in funds. During 2007-08, investors left no stone unturned to participate in India's economy and real estate growth story, and invested across all possible asset classes.


 During this period, 66% of funds were diversified. The share of such funds has reduced to negligible levels, post-2014. In a striking contrast, residential-focused funds have increased to 85% today from the then meager figure of 14%.

According to Shubhkamna Advert, these two trends are reflective of the changed approach of investors. They now prefer to be residential focused instead of weighing every asset class and its benefits.  This has allowed them to garner more returns on investment.

From 2014, Indian real estate has witnessed private equity investments worth $2.2 billion and this is even before taking into consideration the platform level deals worth $2 billion. “When we compare the quantum of activities in last 18 months to investments between 2009 and 2013 that were worth USD 3.9 billion, this uptick is clearly evident. Per year investment has increased by two times," JLL India said in a report.

In a change of trend, investors now prefer investing their money in less number of developers and in fewer property markets. In 2007-08, investors went out to close to 30 cities for deals and are now focusing on top five to eight cities.

Source:- http://shubhkamnaadvert.tumblr.com/post/134046391841/private-equity-firms-narrowing-down-of-investment

‘Less scope for realty industry this festive season’: Shumbhkamna Advert

The decrease in repo rate by Reserve Bank of India (RBI) along with affordable pricing policy and safety of investment for property seekers has resulted in minor increase in the demand rate but failed to stimulate property sales in this festive season. The demand and sales of property were expected to increase with unexpected cut of 50 basis points in repo rate by the RBI on 29th September. Prior to this, there was a cut amounting to 75 basis points passed by the banks to the customers.

Shubhkamna advert pointed out that the cut in the repo rate has not been transmitted to the customers by the banks even after a week of announcement by RBI. This has resulted in withdrawal of the hopes of realty developers and property seekers. Various banks like The State Bank of IndiaBSE 3.29% (SBI) have revised their base cut rates. SBI reduced its base rate cut of 40 basis points by fifty percent to increase its margins.

Shubhkamna developers group stated the fact that a cut of 20-30 basis points in base rates and home loan rates has been announced by various other banks with the fluctuation around nine percent. According to the new policy of the State Bank of India home loans are offered to women at 20 basis points higher than the base rate whereas men get the loans at 25 basis points higher than the base rate. This has resulted in confusion as earlier the home loans were offered at base rate to women and men were offered at five basis points above the base rate. Shubhkamna advert stated that the inability of the banks in transmitting the RBI rate cut to home buyers has disappointed them and belied their trust.