India would require about $330 billion of construction funding to overcome housing shortage in the country and most part of this money would be mobilised from global funds, according to a senior official.
“The capital requirement in Indian real estate are immense,” said Shobhit Agarwal, MD and CEO, ANB Capital Advisors and formerly MD, capital markets, JLL India.
Bank credit
“To give a perspective, India still has a shortage of 18 million homes that requires $330 billion of construction funding. The existing gross bank credit to the sector is less than $55 billion. If we consider the larger sector beyond residential, the capital infusion requirements are virtually limitless,” he said.
Mr. Agarwal, who had set up ANB Capital Advisors with a team of experienced real estate investment banking advisers to help developers to mobilise funding, including overseas funds, said, “Indian real estate is metamorphosing into a highly transparent industry into which all large global funds will want to enter aggressively.”
Commenting on the prevailing funding scenario in the sector, Mr. Agarwal said, “Quality office assets, available at attractive valuations, currently attract the majority of equity investments. Residential will continue to look for financing options till equity investors focus more on this sector.”
“In the GST era, there is also a lot of interest in warehousing and logistics,” he said.
“[The year] 2017 saw more than $ 4.2 billion of investments flowing into real estate, missing 2016 investments by a whisker. [The year] 2018 will be equally good and if REITs launch this year, we can certainly surpass the 2016 numbers with room to spare,” he said.
Mr. Agarwal said while equity and debt capital was available, in most cases developers and funding avenues fail to connect with each other due to lack of resources, connections and intent.
