The department of industrial policy and promotion (DIPP) and the Reserve Bank will shortly meet to evaluate the situation arising out of Lehman’s collapse, as the US giant has $500-million investment in Indian real estate projects.
Foreign investment norms for real estate do not allow repatriation of funds within three years of investment. The RBI-DIPP meeting will discuss a mechanism to deal with cases like Lehman, when foreign investors in real estate go bust. One of the key questions is what happens to the failed investor’s assets, which are bound by certain lock-in periods.
Lehman has its real estate assets spread across the country.
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Developers such as Unitech, Peninsula Land, HDIL and Future Capital, the financial services arm of the Future Group, are in talks with investors including some leading private equity funds for raising investments for their projects, after the collapse of Lehman Brothers, whose third party fund, Lehman Brothers Real Estate Partners had committed an investment of over $ 1 billion to these companies. Even the private equity players are equally upbeat about property investments. Mr. Bharath Banka, Chief Executive of Aditya Birla group’s private equity division, “The current credit crisis, which is expected to continue for a few more months, opens up avenue for private equity firms to make large investments in the real estate sector. Long term returns will be higher in real estate for investments made during this point of economic cycle.”For more view- realtydigest.blogspot.com