India Real Estate Fund has recorded a sharp increase due to the high returns it defers as is apparent from the super-inflated real estate bubble in India. Attracted due to the high returns the Real Estate Venture Funds are coming in India with great zeal. The real state sector in the country is rising to unprecedented heights and is a potential funds investment prospect. The entry of real estate funds in the already over-heated realty market is bound to cause quite a stir.
Since April 2004, India Government has liberalized the laws controlling and regulating the foreign investments in India and real estate funds in the country. This has tremendously encouraged the flow of funds into the real estate sector in the country. Security and Exchange Board of India (SEBI) has also allowed Venture Fund Investment in the local real estate market in the country. Owing to this, the investment of Foreign Direct Investments (FDI) and other foreign liquidity funds have seen a consistent rise of 40 - 45% per year.
Major Real State Funds
A slew of real estate funds, promoted by Indian and foreign financial institutions, are scouring the real estate market for properties with assured returns to invest in. HDFC Property Fund, DHFL Venture Capital Fund, Kotak Mahindra Realty Fund, Kshitij Venture Capital Fund (A group venture of Pantaloon Retail India Ltd) and India Advantage Fund (ICICI) are some of the prominent real estate funds in India. Other major foreign players in the sector include Siachen Capital, New York, Tishman Speyer Properties - Rockfeller Centre - ICICI Bank, Maia, USA, Dawnay Day, UK, Ascendas Fund, Singapore, Warburg Pincus, Blackstone Group, Broadstreet, and Morgan Stanley Real Estate Fund.
DHFL, HI-REF and Kshitij Venture Capital Fund
With the entry of real estate mutual funds, builders will be hard-pressed to develop quality projects and leeway for sub-standard construction practices will be considerably reduced. Real estate funds are expected to acquire real estate assets with quality blue chip tenants and focus on growing markets witnessing substantial urban development.
DHFL Venture Capital Fund, promoted by Dewan Housing, has roped in banks, financial institutions, high net worth individuals and corporate as potential investors. The fund has focused on developing properties rather than invest in real estate. It has put more emphasis on secondary locations to add value.
HDFC India Real Estate Fund (HI-REF), the first scheme HDFC Property Fund, will invest in three broad categories of companies-projects: those in the planning stage, those in the development stage and those, which are complete. However HDFC is not keen on investing in shopping malls because it expects some shake-out in that space in the coming months.
Kshitij Venture Capital Fund
On the contrary, Kshitij Venture Capital Fund, a group venture of Pantaloon Retail India Ltd., will be deploying funds exclusively in developing malls in tier II and III cities, primarily in western and southern India. The company is also launching a mall management service that will manage the upcoming plethora of malls as well as offer mall management services to other mall owners.