The growth in the residential real estate sector, along with an increase in working capital requirements, has resulted in an increase in debt transactions in housing projects, as property developers seek to bridge the gap between demand and supply.
This trend has also led to a surge in private equity and real estate credit funds, such as Nisus Finance, PAG Asia, ASK Property Fund and HDFC Capital, actively seeking to invest more in the residential segment.
“We are actively exploring more investment opportunities in the coming quarters, with many such prospects in other major metros. We have identified stressed residential assets worth around ₹1,000 crore, totalling 5 million square feet across Bangalore, and are actively seeking similar opportunities,” said Angad Bedi, managing director of BCD Group, which jointly operates a stressed fund with Nisus Finance.
In recent deals, Prestige Group announced a quasi-debt deal worth ₹2,001 crore for its four residential projects, with Abu Dhabi Investment Authority (ADIA) and Kotak AIF as investors.
In another investment, Nisus Finance, along with its sponsor and strategic partner BCD Group, invested ₹105 crore in a subsidiary of Shapoorji Pallonji Real Estate.
Besides, Century Real Estate Holdings secured debt financing of ₹450 crore from Edelweiss Alternative Asset Advisors Limited, the asset management arm of Edelweiss Group, a financial services firm.
According to industry estimates, developers require credit demand of $30-35 billion for the completion and construction of their ongoing projects.
“Looking ahead at the next ten years, the real estate sector in India seems to be on a very strong growth trajectory,” said Amit Bhagat, CEO of ASK Property Fund. “Our credit strategies have been performing well, especially after the residential sector made a comeback. It appears that India’s real estate market holds immense potential for growth and promises to be a lucrative investment opportunity.”
In the first quarter of 2024, saw record sales of 74,486 units, according to JLL, marking a 20% year-on-year surge on the back of supply from established developers, stable economic conditions and positive buyer sentiments. It was the second consecutive quarter when sales surpassed 74,000 units, following the exceptional performance in the fourth quarter of 2023, when 75,591 units were sold.
“Strong sales growth means a diverse range of investors will deploy multiple investment strategies, including credit and acquisitions to capitalise on this momentum,” said Badal Yagnik, CEO, Colliers India.
According to projections, residential property sales are expected to range between 300,000-315,000 units in 2024 as the growth trend is anticipated to continue.
