Indian RE to reach new heights

Of the nearly $31 billion expected to be invested from foreign firms in the next two years, the biggest share is expected to go to real estate.

A new study by the Associated Chambers of Commerce and Industry of India says that investment by overseas private equity funds into India will reach $48 billion by 2010, rising from $17.14 billion last year. Real estate, the study predicted, will be the biggest beneficiary of this investment.

The study, entitled “Private Equity – The Money Tree,” says real estate has been yielding average profit margins of 35 percent and even more than 50 percent in some cases.

A total of 386 private equity deals were struck in India in 2007, and real estate sector accounted for a 26 percent share in value terms, receiving $2.6 billion in 32 deals, according to the study.

Private equity investment in India as a whole has risen sharply, growing from $1.1 billion invested in 60 deals in 2004 to $2 billion in 124 deals in 2005.  Cumulatively, from April 2006 to February 2007, $11.89 billion has come in equity.