Real estate players seek debt deals to bridge funding gap
real estate sector, along with an increase in working capital requirements, has resulted in an increase in debt transactions in housing projects, as property developers seek to bridge the gap between demand and supply.
This trend has also led to a surge in private equity and real estate credit funds, such as Nisus Finance, PAG Asia, ASK Property Fund and HDFC Capital, actively seeking to invest more in the residential segment.
«We are actively exploring more investment opportunities in the coming quarters, with many such prospects in other major metros. We have identified stressed residential assets worth around ₹1,000 crore, totalling 5 million square feet across Bangalore, and are actively seeking similar opportunities,» said Angad Bedi, managing director of BCD Group, which jointly operates a stressed fund with Nisus Finance.
In recent deals, Prestige Group announced a quasi-debt deal worth ₹2,001 crore for its four residential projects, with Abu Dhabi Investment Authority (ADIA) and Kotak AIF as investors.
In another investment, Nisus Finance, along with its sponsor and strategic partner BCD Group, invested ₹105 crore in a subsidiary of Shapoorji Pallonji Real Estate.
Besides, Century Real Estate Holdings secured debt financing of ₹450 crore from Edelweiss Alternative Asset Advisors Limited, the asset management arm of Edelweiss Group, a financial services firm.
According to industry estimates, developers require credit demand of $30-35 billion for the completion and construction of their ongoing projects.
