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5
April 2017
With
the declining bank credit to Indian real estate industry, private equity (PE)
investors emerge as the major contributors to the sector by meeting around 75
percent of the funding requirement in the last couple of years, a report said
on Tuesday.
"Analysis
of Institutional Funding in Real Estate", released by Knight Frank India,
said bank credit shrank drastically in the last few years from 57 per cent in
2010 to less than 24 per cent in 2016. The
Total Investment & Insurance Solutions
"Around
three-fourth of the real estate sector's funding requirement is met by PE
players in the past couple of years; as against one fourth in 2010," it
said.
The
current environment for real estate is both challenging and opportunistic at
the same time. Rising non-performing assets (NPAs), higher risk provisioning
and mounting losses in the real estate industry have led to significant
reduction in credit offered by banks. PE players have replaced banks and are
currently the biggest source of institutional finance for the real estate
industry," said the research firm's Chief Economist and National Director,
Research Samantak Das. The Total Investment
& Insurance Solutions
According
to the report, total funding in the Indian real estate sector increased by 40
per cent from $3.8 billion in 2011 to $5.4 billion in 2016.
The
industry witnessed the highest amount of PE fund flow in 2015 with more than
$3.6 billion investments across 100 plus deals, since 2010.
The
report said the year 2016 observed a 13 per cent drop in PE fund flow with less
than 60 deals. "However the year 2016 has also recorded the highest amount
of the average deal size amounting to $56 million," it noted. The Total Investment & Insurance Solutions
"Currently,
PE funding is not just restricted to equity but has largely moved towards a
quasi-equity type of structure," Das added.The Total Investment & Insurance Solutions
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