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How Category II AIFs Transform Distressed Real Estate into High Returns
Real Estate & Special Situations
How Category II AIFs Turn Distressed Assets Into High Returns
1. Buying at Below-Market Prices
AIFs acquire stressed properties at 30–60% lower
valuations, building immediate upside into the investment.
2. Clearing Legal and Financial
Roadblocks
Teams coordinate with banks, NCLT, and regulatory bodies
to:
● Resolve
disputes
● Reconstruct
loans
● Reclaim
project ownership
This unlocks projects stuck for years.
3. Infusing Capital for Completion
Most distressed projects fail because of capital
shortages. Category II AIFs provide fresh funding, speeding up
construction and value recovery.
4. Improving Project Value Through
Strategic Management
They apply structured plans to:
● Rebrand
stalled projects
● Upgrade
design and features
● Strengthen
marketing, sales, and operations
These interventions significantly enhance market demand.
5. Exiting at High Valuations
After stabilising the asset, AIFs exit through:
● Direct
sales
● Leasing
● Institutional
buyouts
This results in higher-than-average
returns compared to traditional real estate.
Why HNIs Prefer AIFs for Distressed Real
Estate
● Higher
return potential
● Access to
institutional-quality deals
● Lower
individual risk
● Hands-free
investment with expert management
● Transparent
structure regulated by SEBI
● Strong
diversification benefits
For HNIs looking beyond traditional real estate, Category
II AIFs offer a strategic, smart, and future-ready investment path.
Conclusion
Category II AIFs play a game-changing role in the Indian
real estate sector, especially within the distressed assets segment. By
combining expertise with structured capital, they convert struggling properties
into highly profitable opportunities. For investors seeking long-term,
risk-adjusted growth, distressed real estate via Category II AIFs is one
of the most promising investment themes today.
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