In the wake of China\u2019s property market woes, global private credit investors are increasingly turning their attention to India, where Prime Minister Narendra Modi\u2019s infrastructure initiatives are driving up property prices. In the first six months of 2023, more than $4 billion in private credit flowed into India, with more than half of that going to real estate, according to a report from Ernst & Young. That\u2019s up from $4.3 billion in the entire year of 2022. According to fund managers surveyed by Ernst & Young, private real estate deals are expected to continue to grow over the next year and a half. “India has benefitted from the shift in sentiment away from China, partly due to strong economic fundamentals,\u201d said Edwin Wong, partner and head of Ares Management.<\/p>\n\n\n\n\n\n\n\n
India is set to overtake China this year as the world\u2019s most populous country, according to United Nations projections, and it is also set to overtake China in terms of economic growth. India\u2019s economy grew at the fastest pace of any major market in the world last year and is projected to do so again in the fiscal year 2024 when growth is estimated to be 6.3%. When one considers India\u2019s track record of economic growth in recent years, its attractive demographics, and its stable and stable government, which has been implementing reforms that have helped attract foreign investors to the country, the story of India\u2019s economic growth looks promising, Wong said.<\/p>\n\n\n\n
Private credit investors offer loans in transactions where bank financing is not available. They cater to a specific market in India where regulations restrict banks’ capacity to finance or lend in property transactions, particularly in the initial stages of land acquisition. In the aftermath of the COVID-19 pandemic, there has been a shift in consumer preferences towards home ownership and larger homes,\u201d said JLL Capital\u2019s head of land & capital markets for north and west India, Nishant Kabra. \u201cThis sort of shift has continued and it doesn\u2019t seem to be slowing down,\u201d he added. \u201cResidential has been setting new records quarter after quarter,\u201d Kabra said. \u201cThis has led to more liquidity entering the system, which has encouraged real estate developers to be more aggressive in land acquisition.\u201d<\/p>\n\n\n\n
India\u2019s real estate sector accounts for 6-7% of GDP and is expected to double by 2025 according to the India branch of accounting firm Grant Thornton. The country\u2019s $1 trillion real estate market is projected to grow to $2 trillion by 2030. With Prime Minister Modi\u2019s emphasis on infrastructure spending to boost economic growth, India\u2019s capital investment in infrastructure increased by 33% in the full budget earlier this year. This type of capital investment in roads, railways, and low-cost housing will accelerate India\u2019s fast-paced urbanization, exacerbating housing shortages. \u201cA large portion of the capital needed to fund India\u2019s growth is going to be from the private sector,\u201d Wong said.<\/p>\n\n\n\n
India\u2019s 2016 real estate regulatory act and recent bankruptcy codes have raised investor confidence, but the intricate land leasing and approval process remains challenging for outside investors. Working in private credit allows investors to work alongside some of the biggest names in the equity market,\u201d MSCI\u2019s Benjamin Chow, senior research analyst for Asia Commercial Real Estate Capital Markets, said. \u201cPrivate credit focuses on a relatively safer part of the equity stack because investing via debt instead of equity provides a greater cushion against losses.\u201d \u201cThere have only been a handful of explicit investment announcements about scaling back in China while increasing in India,\u201d Chow said, \u201cbut the overall appetite for Chinese real estate has declined among global institutional investors.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
In the wake of China\u2019s property market woes, global private credit investors are increasingly turning their attention to India, where Prime Minister Narendra Modi\u2019s infrastructure initiatives are driving up property prices. In the first six months of 2023, more than $4 billion in private credit flowed into India, with more than half of that going […]<\/p>\n","protected":false},"author":1,"featured_media":20715,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_eb_attr":"","_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[1],"tags":[14],"class_list":["post-20712","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-real-estate","entry"],"acf":[],"yoast_head":"\n