The Toronto headquartered financial services major, Brookfield Asset Management Inc, with a robust commercial real estate portfolio in India, is now betting big on the residential development opportunities too. The company is excited about the pick-up in the Indian economy that would lead to huge demand for real estate.
“Given the scale of this opportunity, we could land up with very large investments here. At least $1 billion investment in residential projects would just be a beginning,” said Dev Santani, Country Head-Financial Services and Structured Credit, Brookfield Asset Management.
Interestingly, Brookfield will be investing in Indian residential projects through its global private equity pool, which not many global institutional investors have done so far.
“We are here for long term with patient capital,” Santani said, while stressing that Brookfield is excited about a pick-up in micro-indicators and the fact that the economy is gathering steam. Brookfield made its first investment in India in 2013 with the acquisition of Unitech Corporate Parks (UCP) and has so far invested around $5 billion since then. But most of this has gone towards building its commercial portfolio of nearly 24 mln sqft. And now, Brookfield, particularly its private equity arm, is looking to expand its focus on residential real estate in India.
“I think that the number will grow significantly in the next year. We are pretty excited by what we are seeing on the ground. I think for the first time now things on the ground have actually started to change,” said Brookfield Asset Management’s Senior Managing Partner Anuj Ranjan. According to him, most of the micro indicators are up. Some macro tensions such as oil prices, interest rates and rupee are a bit of a concern but “on the ground the actual economy seems to be finally picking up steam”.
In July, Brookfield Capital Partners invested $100 million in two Hyderabad residential projects of Incor Infrastructure. So far, it has concluded around 11transactions across different cities in India totalling $450 million. Last year, it invested Rs 800 cr in Bengaluru-based realty developer Total Environment Building Systems’ portfolio of five projects spread over 4.5 mln sqft.
The pace of Brookfield’s investments into residential sector would increase further from hereon as both Ranjan and Santani are of view that the demand for housing in India is structurally strong and recent implementation of the Real Estate (Regulation & Development) Act, 2016, has made the sector more accountable.
They attributed the sluggish market over the past four years to a mismatch in supply and demand.
“There is a huge shortage of housing, given the urbanisation and growing income levels of the middle class. There is an inherent demand for the right size and the right locations in all mega cities…With RERA implementation, there is lot of focus now from developers on execution and getting products delivered,” Santani said.