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'PE funds may prefer large cities, looking for mature markets'

Last Updated: Sunday, March 31, 2013 - 14:05

Mumbai: Though smaller cities are offering a great deal of opportunities for real estate investments, private equity funds will flow into large cities this year as investors look for mature markets, says realty consultants Jones Lang LaSalle.

"Currently, smaller cities are offering real estate investment opportunities, but cities like Mumbai, Delhi-NCR and Bangalore among others will see more PE activity this year as investors prefer more mature markets than speculation- driven ones," JLL research head Ashutosh Limaye said.

"Investors are looking at more mature markets with lots of activities, from the occupiers' perspective. They want to invest in markets which are more comfortable and not the ones which are driven by speculation," he said.

PE funds will raise distressed real estate funds and are likely to buy into bad loans of banks which have been sold to asset reconstruction companies (ARCs), Limaye said.

Also, a number of funds which had invested in 2007-08 will be looking at exiting this year, some of them at low internal rate of returns.

"Investors are not ready to take higher risks and therefore would prefer to exit even at lesser returns. We expect some of the funds which had invested during 2007-08 may look at exiting. But given the overall uncertainties, these funds may also look at postponing exits to 2014," he added.

A number of new domestic real estate PE funds backed by corporate entities are also likely to be launched this year, he said.


First Published: Sunday, March 31, 2013 - 14:05
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