KKR & Co. counts South Korea and India among stable commercial realty markets as concerns over the health of the segment mount globally, according to a top executive at the firm.
“Significant amount of debt in the realty sector needs to be refinanced, and rising interest rates along with falling prices continue to push up the risks,” Joe Bae, co-chief executive officer at KKR, said in a media briefing in Mumbai. While markets in the U.S. and parts of Europe are roiled by these woes, India and Korea are holding out as stable spots with high occupancy rates, he added.
Real estate investment vehicles overseen by KKR and its rivals like Blackstone Inc. have come under pressure, with many investors requesting their money back. KKR’s real estate assets fell 8 percent during the December quarter and the firm had capped withdrawals on its real estate investment trust after redemptions exceeded the limit.
Meanwhile, the company is winding down its real estate financing unit in the South Asian nation and will instead focus on equity investments in the sector, Gaurav Trehan, KKR’s India unit head, said at the briefing. Investments into the sector will come from regional funds, he said.
The U.S. firm, which has been investing in India since 2006, has more than $10 billion deployed across various asset classes, according to its website. It is also looking at building up the private credit business through its Asia funds, Bae said, after merging its lending unit into InCred Financial Services Ltd. in 2021.
India Opportunity
The top sectors which KKR is focusing on in the country, which overtook China as the world’s most populous nation, are healthcare, consumer goods and technology as its government continues to work on improving income levels of the growing population, Trehan said.
India, where half the population is under the age of 30, is forecast to be the world’s fastest-growing major economy in the coming years. Prime Minister Narendra Modi’s government has been seeking to create jobs for the millions of people entering the workforce by undertaking reforms like privatizing state-run companies and attempting to formalize the economy by implementing tax changes.
“Investors are more optimistic than ever in the last 15 years on the India story following a clutch of reforms and improving transparency,” Bae said. “While most parts of the world look quite choppy, including U.S. and Europe, India is in a different spot, and we are building on that opportunity.”
