An Explainer: Private Equity Real Estate

Private equity real estate is an asset class that comprises of debt and equity investments in real estate.

PropGuide Explains Private Equity Real Estate

In private equity real estate, many investors pool funds to invest in real estate markets. Private equity real estate investors invest in a managed fund that specialises in spotting potentially fruitful real estate investments. In real estate investment, funds employ various strategies depending on the nature of the risk and the nature of the real estate asset.

Private equity real estate investments bear results only in the long run because funds may be invested in projects that would not completed in a short period of time. The capital investment requirements to invest in private equity real estate funds is high too. But, yet, private equity real estate funds have become popular in past two decades because of the great appeal of real estate investments.

Most investors are not wealthy enough to invest single-handedly in long-term real estate projects. Private equity real estate funds allow them to diversify their investments by investing in a professionally-managed fund.

In 2015, until September, private equity funds had invested $ 2.4 billion in Indian real estate in 53 transactions. In 2014, the investments of private equity funds closed at $ 2.1 billion in 80 transactions, this is a significant rise. This suggests that the amount invested per transaction has risen substantially.

Check out PropGuide's comprehensive guide to real estate terms here.

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