Bengaluru: IDFC Alternatives Ltd, the real estate investment arm of IDFC Ltd, has invested Rs105 crore in Sunworld Developers Pvt. Ltd’s residential project in Noida, on the outskirts of Delhi, in a structured debt transaction.
The investment has been made from the new IDFC SCORE Fund, a Rs760 crore structured credit fund that was raised last year to invest in residential projects in key markets, aiming to offer fully secured debt but on flexible terms to real estate developers.
This is the second transaction from the fund, after it invested around Rs110 crore in a project in Mumbai.
Noida-based Sunworld has raised the debt for Sunworld Vanalika, a residential project in Sector 107, and the money will be used partly to make a land payment to the Noida Authority and partly to fund construction.
Property consultant Knight Frank was the adviser to the transaction.
“This transaction fits into our strategy of focusing on mid-market housing projects. The project has a good location and is ready for occupation, which makes it quite well positioned to tap into the Noida buyers’ preference for ready-to-move homes,” said Ritesh Vohra, partner–real estate, IDFC Alternatives.
IDFC SCORE FUND is the investment firm’s third real estate fund after a Rs700 crore office fund raised in 2011-12 and a Rs750 crore IDFC Real Estate Yield Fund raised in 2014.
Sunworld’s project in Noida has a total of 772 apartments, sold at Rs5,500-6,000 per square foot. The first phase has been completed and the second is nearing completion. The real estate firm has not raised any private equity capital before this.
“Property sales in Noida have been good. Post-demonetization, sales have picked up after 15 January. The project had suffered some delay but we are on schedule to deliver homes to customers,” said Y.K Gupta, head of finance at Sunworld Developers.
Homebuyers today increasingly prefer to buy into ready-to-move-in projects given the delays that projects have suffered in the past. Sales velocity of projects in Noida has been better than in Gurgaon, from a pricing and affordability perspective.
Demand for capital remains high in the National Capital Region, India’s largest property market, where developers continue to battle slow sales and weak consumer sentiment.
“Developers are raising debt today primarily for last-mile funding of projects and to refinance existing loans. Fresh funding for growth is less because there are few projects that are being launched and firms are focusing on existing projects,” said Somy Thomas, managing director (valuations and advisory) at Cushman and Wakefield India, a property advisory.
After demonetisation of high-value banknotes in November , sales continue to be weak in NCR though there are visible signs of a pick-up in other markets.
“We believe the NCR property market will take more time to recover,” Thomas said.