Real Estate Companies Looking to Tap Capital Market this Year

News Posted - 2010-04-13

With the stock markets perking up and the real estate sector’s health also recovering, about 15 mid-and-large realty players are looking at tapping the capital market this year, a real estate expert said. About 15-odd real estate companies are aiming to list in 2010. Apart from the already successfully-listed DB, these include both mid-level and large companies such as Emmar MGF and Sahara,” real estate money management and services firm, Jones Lang LaSalle Meghraj’s (JLLM) Chairman & Country Head, Anuj Puri, said.

But what kind of reception they get and whether they can raise the targeted amount of money will depend upon global investor sentiment, he said. A lot depends on global investor sentiment–which, at the moment, is improving. Appetite is picking up–however, this is also a function of the annual results of the currently listed real estate companies, which are due in April. The potential for IPOs of new real estate companies will emerge at that point,” Puri said.

In 2010, it is anticipated that USD 2-billion worth of private equity investment will come to India, he said. “Private equity funding, apart from the obvious financial support, also helps in improving corporate governance standards of real estate companies,” Puri said. “Private equity interest in India continues, given the market’s risk/reward profile and size. We anticipate 2010 to see about USD 2-billion worth of private equity investment coming in,” Puri said. “PE investment is also instrumental in bringing about transparency and financial discipline, which are now of paramount importance,” he added.

The present escalation in real estate prices is not a bubble building but driven purely by genuine end-users and investors, he said. “The slowdown (in the last year) resulted in residential space affordablity and availability in areas that were previously out of reach for middle-income buyers,” Puri said. “However, the metros are now seeing price escalations in areas where supply is limited. However, there is no indication of a bubble building, since the demand is driven purely by genuine end users and investors and not by speculators,” Puri said.

Source: Indianrealtynews 12/4/10