A Brief Account of Real Estate Private Equity in Indiaby Ankita Sehgal Freelance Blogger, Lives in New Delhi
Real estate private equity funds are a great alternative to investing in volatile properties without the risk of losing the entire sum. Instead of having to invest your funds in a single property, real estate private equity depends on the generation of funds from the real estate market. This is made possible by the association with developers in need of funds.
Benefits of Private Equity
Direct investments in a property entail extensive groundwork. By identifying potential properties, choosing, managing paperwork to getting it registered, this investment needs diligent work for prolonged periods. Furthermore, you need to find tenants or potential buyers to avail returns on your investment. Private equity funds, as opposed to direct investments, just require a transfer of fund. The equity allows you to invest at considerably low amounts with an advantage of lessened risk. The fund managers take all the aspects into consideration before investing the money.
Private equity funds, however, take longer than direct investments to gain any profits. They take about 2-3 years whereas direct investments might present result within a year. The typical realty fund follows a 5+ years tenure. In order to find new investment opportunities, PE funds don’t require the entire amount to be invested at once. Finally, the money is returned to the investors by selling the funds at the conclusion of the tenure.
The market plays an important role in dictating the returns in these funds. While they aren’t extremely liquid, an investor can sell off his/her portfolio to another investor. It is a given that you must do a background check before investing in a fund. Only an informed decision can get you favorable returns.
There are a couple of other ways to invest in real estate:
- Real estate mutual funds – They generate revenues by renting or selling owned properties.
- Real estate investment trusts (REITs) – They invest for income through rent, buy existing mortgages for interest income and provide loans for properties.
However, these types of investments in the real estate India are not available for investors. This is what makes Real Estate private equity a suitable option for Indian investors.
Created on Nov 21st 2017 01:01. Viewed 919 times.
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