Investments by pension and insurance funds in the country’s real estate sector, especially by way of equity participation, will become a reality in the backdrop of the implementation of the Real Estate (Regulation and Development) Act 2016 in place, according to a top-level executive of a leading realty consultancy firm.
“It will be a game changer... [though] may not happen overnight,” Anshuman Magazine, Chairman (India and South Asia) of CBRE said, expecting institutional investors such as LIC, UTI, PF and pension funds besides to flow into the sector over the next 5-10 years.
Other factors set to pave the way for such investments range from the falling interest rates, greater transparency in the realty market in the context of RERA, more professionalism as well as proper systems and processes being put in place. Mr.
Magazine was interacting with press persons at the new office of CBRE in Hyderabad on Monday after its inauguration by IT and Industries Minister K.T. Rama Rao.
Institutional investments in the real estate sector, he said, were limited and restricted to the debt component. The investors stay away from equity investments in view of the associated risks.
This, however, is expected to change with RERA coming in and market set to be regulated. The investors “know they can take informed risk,” he said, adding that besides Indian several foreign institutional investors were also expected to invest.
“The cost of money will be competitive and [the investment] will be for a long term,” he said, adding that once institution put in money, they have a “fiduciary responsibility to make sure everything is run professionally.”
