Real estate investors could play a key role in the recovery of the housing market. Until recently, financing has been a major obstacle for investors to buy real estate. Now that Fannie Mae has relaxed their investor financing rules, market timing and opportunity will merge with money to motivate the sale of more homes.

Help for real estate investment arrived with the news from Fannie Mae that changed the number of financed properties allowed. Previously, the maximum was four financed properties allowed per borrower. The new limit is a maximum of ten financed investment properties. The updated policy applies to individual or joint ownership of single family homes and 2 to 4 unit homes.

 

Real Estate Developers Plan to Raise Fund

With recent qualified institutional placements (QIPs) of Unitech and Indiabulls Real Estate raking-in over Rs 4,000 crore, market watchers believe that more than a half a dozen real estate companies, including Parsvnath Developers, Omaxe and Sobha Developers, could be next in line for fund raising. Housing Development & Infrastructure Ltd (HDIL) on Saturday sustained the fund-raising momentum in the realty space when it announced plans to raise over Rs 2,800 crore from sale of shares. Delhi-based Parsvnath Developers is also mulling various options, including a QIP, to raise overall Rs 500-800 crore in the current quarter. According to a person involved with the plans, Parsvnath would use the funds for ongoing projects and lowering its debt obligations, that are currently pegged at Rs 1,600 crore.

When contacted, the Parsvnath Chairman, Mr Pradeep Jain, declined to comment on the company’s plans but said that the market sentiments were strong. “There is an investor appetite for real estate stocks and also valuations at the current level are attractive,” Mr Jain said. Similarly, Omaxe is looking at fund-raising options such as QIP or a preferential placement although just how much it would look to raise, could not be ascertained. Omaxe’s total debt currently stands at Rs 1,600 crore and the company hopes to trim this to Rs 1,000 crore by the fiscal-end. Hence, in case of Omaxe too, part of the money raised could go into retiring debt and the balance into new and existing projects, a source pointed out.