AppId is over the quota
AppId is over the quota
MUMBAI | Mon Oct 3, 2011 11:30am BST
MUMBAI (Reuters) - Indiareit Fund Advisors, a property fund backed by UK private-equity firm 3i Group (III.L), will start marketing its $225 million (145 million pounds) commercial rental yield fund to overseas investors by the end of this month, a top official said on Monday.
Indian developers have come under pressure in recent months as rising interest rates deter buyers, even as it becomes more expensive for builders to access funds.
"We think this is the right time to bet on rental yields, given the slow offtake in commercial sales. And the same time, rentals are rising in top five cities in the country," said Ramesh T Jogani, chief executive officer and managing director of Indiareit, told Reuters.
"Properties are available at marginally higher than the cost of development," he said. "But lease rentals provide a major consistent income."
Rental yield funds invest in properties that have been fully built, leased out or ready to lease out. Such properties have lower risk compared to those still being developed. Also, rented properties provide a regular income.
Indiareit, which is controlled by industrialist Ajay Piramal and manages assets worth about $1 billion through various funds, is planning to raise half of the total corpus from overseas investors, mainly from the Middle East and Singapore, he said.
Macquarie said in a note last week that rental has been the only resilient source of income for developers and builders with occupied yielding assets and good quality tenants are in a good position.
India's central bank has raised interest rates 12 times in 18 months and economists expect at least one more rate rise this year.
"Pressure mounts on developers as interest rates are at the top end," Jogani said. "Enough opportunities are available in the market," he added.
(Reporting by Indulal PM and Rajesh Kurup; Editing by Aradhana Aravindan)
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