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Private equity funds boost real estate market

By Rajinder Dogra


From Business-Standard.com

The real estate market in India is driven by Asian real estate funds, Singapore developers and domestic private equity funds dedicated to real estate, according to Mridul Upreti, head, corporate finance and investments at Jones Lang LaSalle.

However, new players |are rapidly emerging among US opportunity funds, UK private equity and venture capital firms. 'This increased institutional investor interest is expected to push the market to higher efficiency levels,' he added.

With this investor interest in India, Jones Lang LaSalle expects exponential growth in foreign investments across four to five key markets. The focused areas are suburban business parks, large residential schemes, and city centre mixed-use schemes with hotel/serviced apartment components.

There could be further acceleration of investment interest in shopping centre development projects in India, in the wake of the expected easing of foreign investment rules in the Indian retailing industry.

'The clearance of the proposal for 100 per cent foreign direct investment (FDI) in construction and development projects in India, which was announced early this year has given a boost to foreign investments in the country,' said Upreti.

Global investment in real estate increased by 12 per cent to $457 b in 2004 (on 2003) according to a report published by Jones Lang LaSalle (Global Real Estate Capital - Travelling Further to Return Stronger). Of this, Asia Pacific accounted for 11 per cent at $48.3 b.

The Asia Pacific investment is a 74 per cent increase over 2003. Of this, 24 per cent came from cross-border investment, which has grown by over 146 per cent to reach $11.5 billion, said Richard Johnson, managing director of Asian Capital Markets Group at Jones Lang LaSalle.

The bulk of the cross-border activity came from North American investors who traded $5.1 billion of assets and invested a net $700 million in the Asia Pacific region. Amongst all the real estate sectors, the office market was the most highly traded asset, accounting for 45 per cent of all capital market flows in Asia Pacific.

According to Johnson, 'The globalisation of real estate investment is more than simply an extension of booming local and regional investment markets or a theme for the medium term. It is here with us, now, and we believe it is here to stay. Not only is there a vast weight of capital flowing between regions, sophisticated global investors are exerting an increasingly significant influence on local markets through competition with domestic and regional players.'

This article is sponsored by: www.indiarealestateblog.com


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