Private equity giant Apollo Global Management (APO.US) plans to lend about $1 billion to Indian developers this year, betting that the residential real estate market will recover as the epidemic eases, Zhitong Financial APP has learned.
Nipun Sahni, a partner at Apollo, said the company lent $750 million to Indian developers last year, of which $2/3 was spent on residential projects. About 70 per cent of loans this year will go to residential builders and the rest to commercial developers.
"Market trading volumes have returned to pre-COVID-19 levels, with some markets even higher than in 2019," Sahni said. " "the number of unsold homes in India is at a 10-year low, a sign that prices are likely to rise."
India's property market rebounded strongly from the trough caused by the epidemic as low interest rates and discounts from developers spurred demand. Low inventory levels are likely to keep the housing market booming, with prices in India's top six cities rising by as much as 10 per cent, according to Crisil Ratings, the Indian credit rating agency.
Sahni said India's office property market was benefiting from the increase in the number of initial public offerings (IPO) and the expansion of the technology industry as a whole.
Housing inventory in India reduces or pushes up house prices
According to the Apollo website, the company opened an office in Mumbai in 2008 and now manages about $513 billion in assets worldwide. The company has been lending to Indian property developers since 2017.
A year later, IL&FS Investment Managers Ltd. And Dewan Housing Finance Corp. And so on, the shadow banks are in trouble, leading to chaos in the local credit market. Apollo stepped in and increased its lending activities. Sahni said the need for financing grew during the outbreak and its business began to take off.
Sahni said it planned to hire two more bankers this year to strengthen its 12-person team in Indian real estate.
Sahni said the company will continue to invest in the Indian market. Apollo's average loan size will be between $40 million and $60 million.
The conflict between Russia and Ukraine and supply chain problems could put pressure on India's real estate market. The Reserve Bank of India unexpectedly raised interest rates earlier this month, draining liquidity from the banking system. Shaktikanta Das, governor of the Bank of India, said India faces persistent inflationary pressures.
Rising prices for commodities, including construction materials, coupled with pent-up demand for housing, could push up property prices in India, Sahni said.
"the COVID-19 epidemic has made people realize that home is not only a place to sleep, but also the most important part of family life," Sahni said. "all real estate projects, including parity, high-end and luxury, are doing well. So that's why I say that the next year or two will be one of the best periods for India's residential real estate market. "