Primary Real Estate plans $500 mn fund
Source: Economic Times of India.
HONG KONG: Indian fund manager Primary Real Estate Advisors is planning to launch a fund worth as much as $500 million, probably in the second half of this year, but said it will tread carefully as the country's property boom stutters. Foreign investors have taken advantage of such funds to rush into property development in India since it eased rules on inward investment in the construction industry in early 2005, sparking rampant land speculation and a near quadrupling in prices. But despite signs of a slowdown -- home sales volumes have fallen by one-fifth in Mumbai and 40 percent in Bangalore in the last year -- the head of Primary Real Estate, Ashwin Ramesh, is convinced that North American and European investors will invest. "There are certainly cowboys out there," the Indian fund manager said in a telephone interview. "But our style is more focused for a risk averse environment." "We would typically underperform in a raging bull market but overperform in a flattish market." Ramesh expected to launch the new fund within six months to a year, and hoped to raise between $300 million and $500 million. "At the moment there's interest in North America and London, but we're in touch with people all over the place," he said, adding that he was busy expanding a team that is now investing a $32 million fund closed in mid-2007. Compelling demographics Primary Real Estate would aim for internal rates of return of 15 to 20 percent, Ramesh said, below the usual 20 to 25 percent often advertised by funds in Asia's up-and-coming property markets of India, China and Vietnam. Rival India-based funds include Trikona Capital and Kotak Maihindra Investments, while Citigroup Property Investors and Morgan Stanley Real Estate have been at the forefront of a wave of global funds entering the country. The demographic fundamentals for India's real estate boom touted by analysts appear compelling for many investors. According to CLSA, disposable income has grown 12 percent a year for the past five years and the number of people per household has dropped to 5.1 from 5.52 in the past decade, as young professionals move away from their parents. But developers have crammed projects into a few cities and certain building types, Ramesh said. "At this point there's overbuilding in certain segments, IT space and retail malls, for example," he said. Primary Real Estate, which will team up with developers -- "high quality people, that's our first filter," Ramesh says -- has identified a big township project outside Mumbai and will seek out projects in emerging cities. "Some towns are becoming cities because of infrastructure and public-sector investment," Ramesh said, although he declined to give examples. "We think these sunrise locations, once their direction is set, can be safe bets."
HONG KONG: Indian fund manager Primary Real Estate Advisors is planning to launch a fund worth as much as $500 million, probably in the second half of this year, but said it will tread carefully as the country's property boom stutters. Foreign investors have taken advantage of such funds to rush into property development in India since it eased rules on inward investment in the construction industry in early 2005, sparking rampant land speculation and a near quadrupling in prices. But despite signs of a slowdown -- home sales volumes have fallen by one-fifth in Mumbai and 40 percent in Bangalore in the last year -- the head of Primary Real Estate, Ashwin Ramesh, is convinced that North American and European investors will invest. "There are certainly cowboys out there," the Indian fund manager said in a telephone interview. "But our style is more focused for a risk averse environment." "We would typically underperform in a raging bull market but overperform in a flattish market." Ramesh expected to launch the new fund within six months to a year, and hoped to raise between $300 million and $500 million. "At the moment there's interest in North America and London, but we're in touch with people all over the place," he said, adding that he was busy expanding a team that is now investing a $32 million fund closed in mid-2007. Compelling demographics Primary Real Estate would aim for internal rates of return of 15 to 20 percent, Ramesh said, below the usual 20 to 25 percent often advertised by funds in Asia's up-and-coming property markets of India, China and Vietnam. Rival India-based funds include Trikona Capital and Kotak Maihindra Investments, while Citigroup Property Investors and Morgan Stanley Real Estate have been at the forefront of a wave of global funds entering the country. The demographic fundamentals for India's real estate boom touted by analysts appear compelling for many investors. According to CLSA, disposable income has grown 12 percent a year for the past five years and the number of people per household has dropped to 5.1 from 5.52 in the past decade, as young professionals move away from their parents. But developers have crammed projects into a few cities and certain building types, Ramesh said. "At this point there's overbuilding in certain segments, IT space and retail malls, for example," he said. Primary Real Estate, which will team up with developers -- "high quality people, that's our first filter," Ramesh says -- has identified a big township project outside Mumbai and will seek out projects in emerging cities. "Some towns are becoming cities because of infrastructure and public-sector investment," Ramesh said, although he declined to give examples. "We think these sunrise locations, once their direction is set, can be safe bets."
You have provided all accurate information on reform issue in Real Estate Sector. I want to say one thing which is now days the demand of property has increased and it will increase more and more in coming years in India. The pune is first choice of many investors these days.
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