“UAE investors” seek “exposure in India real-estate” | by: Cleofe Maceda | Gulf News

” Property funds generate growing interest from affluent clients in a market with growth potential “…

Investors from the UAE are increasingly looking to put their money in India’s real estate in view of the country’s positive environment and long-term growth potential, a financial services company told Gulf News.

ASK Group, which earlier launched funds that are focused on residential real estate in India, has received encouraging response and is bullish to attract a large interest from investors, especially high networth clients, in the UAE.

The company focuses on institutional investments, such as fund of funds, sovereign funds, endowment funds and family offices, which are advisory firms that serve affluent households. It currently seeks to raise $200 million (Dh735 million) offshore fund to be able to invest in housing developments in India…

“Family offices currently are more proactive in participating in India growth story and we hope the process of institutional investors has begun. [We’ve] got encouraging response from family offices and could able to close more than 50 % of the fund from UAE currently,” said Managing Director and CEO of ASK Group.

Rohokale said both non-resident Indians and citizens in the UAE, including institutions and ultra high-net worth residents, are looking for diversification and are actively seeking India’s real estate as a “de-risking strategy”.

He said the introduction of Real Estate Investment Trusts (REITs) in India and regulations such as the Land Acquisition Bill and Real Estate Regulatory Bill, coupled with a stable currency and “ healthy macro-financial numbers”, have helped renewed investor confidence…!!

“ Of late, we have seen many [Indian] developers coming to Dubai, setting up their offices and doing road shows to which investors have reacted positively because of currency gains. The property prices in India have bottomed out and in the past, many investors have made money in Indian real estate and hence are more comfortable,” Rohokale added.

ASK Group is a diversified financial services company that has been operating in India for over 30 years. Its asset management business covers equity, private equity and real estate private equity. The company considers UAE as a “very strategic market”…

Investors from the UAE are not just focused on real estate funds. Private wealth is spread across a wide range of vehicles, including mutual funds, traditional savings and long-term investment plans, among others.

A new survey commissioned by Standard Life suggested that investment flows from the UAE are likely to increase, with two thirds of NRIs saying they are optimistic that India will be more investor-friendly after the general elections…

In its report on private equity (PE) investments in real estate, it said the healthy increase was due to increasing investments in leased office assets by both foreign and domestic funds, given the potential for stable yields and attractive capital values.

Residential assets also witnessed stable investments as developers are increasingly using private equity funds to raise capital. Despite stagnant sales, the high coupon rates offered by developers is attracting capital. Fund houses have tried to mitigate some of these risks by investing through structured mezzanine deals guaranteeing fixed returns.

Executive Managing Director South Asia, Cushman & Wakefield, in a statement said, “A number of funds have committed funds towards investment in Indian real estate. This is expected to translate into increasing transactions in the sector, especially in income-yielding assets. With expected growth in capital requirements, we see a number of fund houses raising additional capital to invest in the sector.”

He said, “Investments in real estate by domestic companies have witnessed a significant increase during the first quarter of the year. This was due to companies acquiring land and office assets required to execute growth strategies ahead of the anticipated recovery of the economy in the second half of the year.”

The office and residential segments recorded Rs1,435 crore and Rs1,065 crore investments respectively; contributing close to 51% and 38 % respectively to the total private equity investments in the real estate sector in India during the quarter.

One transaction in the retail segment in Bangalore was worth Rs300 crore. Investor interest in the commercial office sector has been steadily increasing, with investments doubling in Q1 2014 from the first quarter of 2013 (Rs700 crore).

Healthy valuation of commercial developments, stable yields and the potential for rising capital values has led to investors actively evaluating and investing in prime office assets across the top cities.

The total number of deals in the first quarter of 2014 was recorded at 18, one deal lower than the previous quarter, thus indicating an increase in average deal size by nearly 35 % to Rs.156 crore.

Bangalore topped with investments of Rs1,905 crore, an increase of 45 % compared to the previous quarter. The transaction volume in Mumbai was up 22 %  over the previous quarter at Rs470 crore. NCR and Pune registered investments of Rs345 crore and Rs80 crore respectively…

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