Pvt investors prop up realty market

Real estate developers are now living by a new credo: when the going gets tough, rope in private liquidity investors. Such investors’ backing is not only helping developers tide over a sluggish market, it is also reducing the ‘risks’ for the end buyer.
More good news: developers don’t need to slash property rates to sustain themselves in the market.

Take the case of the slum redevelopment project at Malad, entrusted with Omkar Realtors. Red Fort Capital Advisors is investing Rs250 crore in it. Last month, the development firm raised Rs200 crore from IndiaReit Fund Advisors for its slum rehabilitation authority project project in Worli. ASK Property Investment Advisors has decided to invest Rs40 crore in the Paranjape Schemes’ Rs150-crore housing projects in Pune. Sun Apollo has invested Rs75 crore in Assotech Blith in Gurgaon, while Sun Apollo is funding Rs45 crore of Godrej Properties’ Gurgaon project.

Sandeep Reddy, co-founder of real estate portal GrOffr.com, said such an approach to raising funds cuts down the risks of the project falling through. He explained that if a project is still in the construction stage, a developer is forced to offer high discounts to a buyer, considering the risk of whether it will see the light of day. But in ready-to-occupy projects, the developer has an upper hand. “It is a good move by private liquidity investors to keep the industry alive. It will increase developers’ holding capacity in the turbulent market. Now, developers will not be in a hurry to sell pre-launch and under-construction flats,” said Reddy.