Market Overview

Growth drivers The Indian real estate market is poised for a sustainable long term growth on account of following growth drivers:
  • High GDP growth
  • Favorable demographics
  • Urbanization
  • Low housing ownership
  • Increasing per capita income
  • Low mortgage to GDP ratio
Asset Class

India has an urban housing shortage of 25 million units (Source: www.nhb.org.in). Further, a thrust on infrastructure and increasing urbanization shall lead to increasing migration, thereby leading to a demand. Commercial properties are coming out of a cyclical downturn and the outlook for next 3 years looks positive. On the other hand, the retail and the hospitality sectors continue to face challenges.

LiquidityCurrently, developers are facing liquidity challenges due to lower sales in a few micro markets, tightening of construction finance, end of tenure of the restructuring window of the RBI etc. This in turn gives us an opportunity to partner with developers on both structured and equity transactions.
Institutional Framework Over the last decade, Indian real estate companies made a transition from being a family owned business setup to professionally managed companies. This has gained momentum with the opening of sector for FDI in 2005. Capital markets also witnessed number of real estate companies raising money through IPO route. We believe, there would be more participation from institutional setup in the form of private equity, mezzanine debt, senior debt, REIT & REMF, thus, providing further impetus to this sector.
  • 65% of total market in value terms
  • Self liquidating asset
  • Project timeline: 2 years to 4 years
  • Key Demand drivers
    • Falling size of households
    • Increasing affordability
    • Rising Urbanization
  • Majority funded by pre-sale and hence low external funding required
  • 25% of total market in value terms
  • Sale on completion
  • Project timeline: 2 years to 4 years
  • Key Demand drivers
    • Growing economy
    • Growth in human capital intensive sectors such as IT, Telecom
  • Low pre-sale funding and hence high project finance required
  • 5% of total market in value terms
  • Stabilized asset sale
  • Project timeline: 5 years to stabilization
  • Key Demand drivers
    • Rising affordability
    • Young demography
    • Enhanced aspirational value
  • Rare pre-sale funding and hence long term funding required
  • 5% of total market in value terms
  • Stabilized asset sale
  • Project timeline: 4-8 years to stabilization
  • Key Demand drivers
    • Growing economy
    • Strong growth in domestic travel
    • Increase in both business and leisure travel
  • Rare pre-sale funding and hence long term funding required
The aforesaid data is based on various market sources and the data is extrapolated based on these sources. The Portfolio Manager is not responsible for the accuracy and correctness of the data.
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