PE/real estate funds have shown increased interest in Affordable Housing development Projects.This is validated by a few of recent announcements/ investments.
June 2008. Actis India real estate fund that raised $100mn from CDC Group- the UK government-backed emerging markets fund of funds- plans to make investment of $15 - 25mn in lower middle-income residential, healthcare, hospitality, and commercial real estate in and around large cities in India.
Actis first investment in real estate was of $28 mn in Vaishnavi Group that focuses luxury villas, residential layouts and commerical & retail properties.
April 2008 : Global private equity firm Warburg Pincus invested $75 million in Unique Affordable Homes Pvt Ltd, part of the Jaipur-based Mannat Group company. The company will build affordable housing projects in North and
April, 2008: Deutsche Bank RREEF that plans to invest over $1 billion in
March 2008: New York based Acumen Fund, a nonprofit venture fund, and Hindustan Latex (HLL), announced the formation of LifeSpring Hospitals Pvt Ltd - a joint venture intended to create a chain of small hospitals (20-25 beds) focused on providing low-income clients in India with widespread access to maternal and child health care services.
Acumen Fund is a nonprofit venture fund that invests in underserved markets like
Jan 2008: Millennium Spire, a global real estate fund that entered
Other Significant investors who have shown interest in Affordable housing development projects are
Jan 2008: Red Fort Capital started by G B Singh (former CEO & President of Construction Division of DLF). In its first domestic fund of $250mn has targeted affordable housing as one of the subsectors for investment.
Oct 2007: Private Equity arm of world bank that committed $1bn of investment in India had shown interest in Affordable housing projects.
According to a study done by Mckinsey in May 2007 The middle class currently numbers some 50 million people, but by 2025 will have expanded dramatically to 583 million people—some 41 percent of the population. These households will see their incomes balloon to 51.5 trillion rupees ($1.1 billion)—11 times the level of today and 58 percent of total Indian income.
Be it Real Estate or FMCG or Automotive clearly every one is having a close look at the Indian Middle class.
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The property market has boomed since India eased rules on inward investment in the construction industry in early 2005, partly fuelled by pledges by foreign investors that they will pump up to $20 billion into the country. But government figures show only about $2 billion has actually been spent in the last three years. Real estate prices have cooled in the last six months. Developers had piled into the top-end of the where profit margins are highest. Young people don’t have housing open to them. Developers are targeting the young workforce in a country where double-digit salary hikes are common in sectors such as real estate, information technology and financial services. What’s on the market so far isn’t satisfying demand .It was a rising market so people didn’t think. Developers have been overpaying for land, making the wrong product and not doing their research. Analysts say the strong supply of high-end apartments in many areas, including Bangalore and New Delhi, is likely to hit prices. Developers are giving away freebies to lure buyers, with one even including a car in the package. India’s biggest property firm DLF is changing its designs for apartment blocks in New Delhi’s suburb of Gurgaon to squeeze in more two-bedroom units, along with four-bedroom homes.Land prices have quadrupled in many areas over the last three years but many in the industry expect prices to drop anywhere between 15 percent and 50 percent in the coming year.Developers hope authorities will allow them to build taller blocks by raising a measure of building density called the floor space index (FSI). The Maharashtra state government made such a move last month to ease a housing shortage in Mumbai. Indian property investors are targeting lower- to mid-end house owners in the booming economy now that sales of plush apartments have slowed. With the number of families earning more than $5,000 a year set to double to around 20 million in the next two years, demand for small and simple apartments is set to mushroom. But there’s a need to reduce land costs, increase FSI, build infrastructure first.For more view- realtydigest.blogspot.com
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