Why realty investors, PE funds struggle to get good returns in India

High rises in Mumbai, India. Photo by Joel Steevan on Unsplash

Professional real estate investors and private equity funds have struggled to achieve good returns in India.

The primary reason is that the industry is complex and opaque, leaving a purely investment-focused firm with a lot of misses along with their hits, thus reducing average returns.

Very early in our company’s history, we noticed that funding developers was easy, but exiting these investments with good returns was very complex. We decided not to be like other companies that have perpetually struggled with this.

So, we decided to solve it once and for all. In order to reduce risk, we built specialized teams to curate projects from different functional perspectives: a team to assess land-related issues, a liaising team to understand the complexity of the approvals involved in the whole process, a team to mitigate legal risks, a design and product team to evaluate projects and pricing, and an engineering and construction team to handle construction related issues.

We also developed legal and financial control structures to reduce counter-party risks. Our proficiency in real estate allows us to be extremely accurate in our curation of deals and build an efficient portfolio of profitable projects. The largest developers can source capital at lower costs and offer investors lower returns.

The best investments are often with experienced tier-two developers having a passion for excellence, but not the resources as their larger counterparts.

We are able to partner with these developers and use our deep domain expertise to complement their skills.

This way, we can offer additional value to the developer, while enabling our investors to secure higher internal rate of return.

This article was first published on livemint.com.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.