Smart money is moving out of realty; so why should you buy?

If you are a home buyer waiting for property prices to fall before buying, here’s a counter-thought: the big investors are actually moving out of real estate.

One signal came last week when Deutsche Bank asked the Mumbai-based Lodha Group to return its money with a clean profit. The group forked out Rs 2,542 crore to the bank to enable it to exit its investment.

[caption id=“attachment_215271” align=“alignleft” width=“380” caption=“Apart from Deutsche Bank, there are at least six other private equity and property funds that have exited.Reuters”]  [/caption]

According to a Business Standard report, apart from Deutsche Bank, there are at least six other private equity and property funds that have exited. Among them: HDFC Property Ventures (two investments of Rs 715 crore), Kotak India Real Estate Fund I (Rs 575 crore), Indiareit Fund (Rs 500 crore), India Advantage Fund Series I (Rs 305 crore) and Trinity Capital plc (Rs 120 crore).

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That’s a cool Rs 4,700 crore-and-odd opting out of real estate (Read the full story here). The problem is fly-by-night "investors" are realty's big mafia - keeping prices unreasonably high and preventing actual users from buying. This is also one reason why the Deutsche Bank’s are running away.

If the smart money is moving out of realty, should you be getting in?