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Private equity players eye real estate mart in Kolkata
Manish Basu
Kolkata, Feb. 29 Private equity companies are eyeing Kolkata’s real estate industry as a viable market this year. Last year Kolkata’s share in the total FDI pie of $4 billion in the real estate sector, was only $150 million, a mere 3.75 per cent. But with the other metropolitan cities beginning to look saturated and the West Bengal Government providing incentives through joint sector projects, private equity players are eyeing Kolkata this year.
“2008 is the year of private equity in Bengal,” said Mr. Shubhojit Agarwaal, Head, Investment Services of Jones lang LaSalle Meghraj, one of India’s largest real estate services and money management firms.
Gains pace
“Kolkata is beginning to attract a lot more investors now. The same thing happened with Bangalore and Delhi. After an initial slag, the market suddenly gains momentum. Kolkata is now at that crucial juncture,” he said on the sidelines of a seminar organised by the Confederation of Real Estate Developers’ Association of India here.
A total of $18 billion of FDI is waiting to enter the country, of which a larger portion than in the past will flow to Kolkata this year, he said.
Inflow of more foreign funds into the sector will also bring down interest rates on home loans, said Mr. Bhavesh Shah, Executive Director, JM Financial Investment Banking.
Mr. Sunil Rahokale, MD and CEO, ICICI Home Finance Company Ltd, said: “There is a market of Rs 1 lakh crore to be invested in residential projects in India, of which Kolkata’s share has been only Rs. 2,000 crore, a mere 2 per cent. In contrast, share of Mumbai, Delhi and Bangalore is10 per cent, 8 per cent and 7 per cent.” This will provide a big scope for Kolkata to catch up with the other places, Mr Rahokale adds.
Focus on housing
Developers however need to focus on investing more in the affordable housing segment, he said. “Developers are not that active in this segment. A good demand is emerging in the Rs 15-25 lakh residential units and below 1,000 sq. ft flats. The Kolkata market is looking valuable in this segment.”
However, with big residential projects being built in Kolkata, the scope for private equity funding in such projects has increased, believes Mr. Agarwaal. “ Selling small projects is easy. But large projects need the helping-hand of private equity funding.”
Almost 80 per cent of private equity money has gone into commercial projects till now. Given the volatile market conditions, private equity is more favourable now than going for IPO, Mr Agarwaal felt.
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