2014 Set To Witness Big Ticket Funding In The Real Estate Sector
in Property Time |Property News !
Mon Feb 24, 2014 7:40 pm
• 34 Posts
Bangalore : With 2013 coming to an end, the lack of funding is one major obstacle that real estate developers wish to get rid of in the new year, especially since many key policy decisions taken this year will make it easier for developers to ensure funding for their projects. Real Estate developers can expect major investments in the sector either in the form of private equity or through Real Estate Investment Trusts (REIT).
As of now, the largest investor in commercial real estate has been Blackstone. It has made contributions worth $1 billion to the country's real estate sector, mostly by means of investing in IT parks and Special Economic Zones since 2011. Xander, which controls capital of over $2 billion and over 50 million square feet of residential properties as well as commercial and business properties, is also keeping an eye out for REIT structures, along with other investors such as IDFC and Everstone.
REIT's can provide impetus for the growth of the real estate sector, provided they are in confirmation to the taxation laws. There has been a clear realisation within the real estate sector that the residential real estate sector. needs to record significant growth for the investments to actually benefit the sector. Some of the positive developments that will help in achieving this objective of growth are the Land Acquisition Act, the Regulator Bill and the REIT guidelines.
Financing for land purchase is another approach that has been suggested by real estate analysts who believe that getting even 50 percent finance from it can ease the issues of liquidity that developers often tend to face. They also believe that some of the practices being followed in the sector have prevented NRI's from investing money in the sector.
People have put their hope on the fact that with the elections approaching, the government might take more steps to help the economy recover by addressing the liquidity concerns of the sector in its budget. REIT is also set to be implemented with coherent taxation policies in the next year which could bring about a positive change in the sector. Moreover, with several high profile project launches in the next year, developers seem likely to secure a significantly higher amount of funding.
Thus, while 2013 has witnessed modest growth in the real estate sector of the country, it has also made the developers and lenders wait for the approval of measures such as REIT, along with other cost and benefit analysis. With the long wait over, 2014 is set to record a huge boost in the growth of the real estate market and bring benefit to both investors and buyers.