A Brief Account of Real Estate Private Equity in India

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.

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.

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.

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