The entry of real estate funds in the already
over-heated realty market is bound to cause quite a stir. A slew
of real estate funds, promoted by Indian and foreign financial
institutions, are scouring the real estate market for properties
with assured returns to invest in. HDFC Property Fund, DHFL
Venture Capital Fund, Kotak Mahindra Realty Fund, Kshitij Venture
Capital Fund (A group venture of Pantaloon Retail India Ltd) and
India Advantage Fund (ICICI) are some of the prominent real estate
funds in India.
With the entry of real estate mutual funds, builders will be
hard-pressed to develop quality projects and leeway for
sub-standard construction practices will be considerably reduced.
Real estate funds are expected to acquire real estate assets with
quality blue chip tenants and focus on growing markets witnessing
substantial urban development.
DHFL Venture Capital Fund, promoted by Dewan Housing, has roped in
banks, financial institutions, high net worth individuals and
corporates as potential investors. The fund has focused on
developing properties rather than invest in real estate. It has
put more emphasis on secondary locations to add value.
HDFC India Real Estate Fund (HI-REF), the first scheme HDFC
Property Fund, will invest in three broad categories of
companies-projects: those in the planning stage, those in the
development stage and those, which are complete. However HDFC is
not keen on investing in shopping malls because it expects some
shake-out in that space in the coming months.
On the contrary, Kshitij Venture Capital Fund, a group venture of
Pantaloon Retail India Ltd., will be deploying funds exclusively
in developing malls in tier II and III cities, primarily in
western and southern India. The company is also launching a mall
management service that will manage the upcoming plethora of malls
as well as offer mall management services to other mall owners.