The correction in the Indian hospitality sector is not yet complete says Sudeep Jain, executive vice-president (India), Jones Lang LaSalle Hotels.
In his white paper on funding real estate projects in Indian hospitality, Jain – who recently brokered the deal between Swissotel and Ambuja Realty for the chain’s first Indian property – attributed this to the emerging inventory supply where projects are coming online, though a large number have an uncertain future.
“I am looking at the announced supply, of which only 50% will actually be realised. The decline may be arrested in some cities, but from the operations, development and investment standpoint, things look different,” said Jain.
The white paper stated: ‘Private equity, while still being an option, has seen a slowdown. Investors are worried about the market bottoming out and there is a feeling that the correction in the hospitality sector is still not complete. PE players are avoiding common equity in SPVs but looking at structured investments with greater security and preferred returns. However, there are a number of funds which are actively looking to buy out or invest in distressed assets at enticing valuations.
“We do not see too much distress, but there is a spread between the ask and give prices in transactions right now,” said Jain.
