Asset management companies through their alternate investment funds (AIF) foreseeing opportunity amidst disruption in real estate caused by coronavirus pandemic. The alternate investment funds are chasing for net worth positive stalled residential projects that require last-mile funding.
Asset management companies and developers are not ready to put all the eggs in one basket. Discreetly, they are ready to invest, but in multiple stressed residential projects rather than investing a large sum of the fund in one project.
Recently, MPowered has specialized in asset-management solution raised USD 21 million in a pre-series A round, has identified five stalled projects to invest. Out of five identified projects – two in Noida, two in Gurugram, and one in Mumbai. MPowered is in various stages of negotiations to invest in multiple projects with a primary focus on stressed commercial projects which offers a better return on investment. They are also keen on investing in stressed residential projects also.
Lumos Alternative Investment Advisors along with multiple developers launched INR 300 crore stressed real estate asset focussed fund. With this fund, they are targeting stalled project who are looking for last-mile funding, early-stage approved projects and acquisition of stress residential & commercial projects. They are primarily scouting for an opportunity in six major Indian cities including NCR, Bangalore, and Mumbai with an investment in tune of INR 20 – INR 40 crore per transaction.
Apart from asset management companies, few developers with strong balance sheets are also focussing on stalled projects rather than investing in land and other new projects. Gurugram based real estate developer Alpha Corp also plans to invest INR 500 crore in struck projects with a ticket size of INR 50 – INR 80 crore per project. The company is in the view that there is no point of launching a new project when there are many stalled projects which are financially viable.
Industry experts are saying currently there are abundant of investment opportunities and the right time for alternate investment funds to deploy in stalled projects. As the real estate sector is facing a severe cash crunch and getting almost no liquidity support of major financial institutions and non-banking finance companies.