Indian real estate attracts Rs 39,182 crore PE investments in first 3 quarters of 2019

Private equity investment in the real estate sector has witnessed a 19 percent increase to Rs 39,182 crores during the first nine months of 2019. Foreign investors focused more on the acquisition of commercial complexes, according to a report by Cushman & Wakefield. Private equity (PE) investment in the previous year stood at Rs 32,890 crore.

There has been a 19 percent upswing in investment activity on a year-on-year basis which shows a positive outlook for the industry, stated Cushman & Wakefield (C&W). Office properties witnessed PE investment of Rs 20,757 crore during the January-September 2019 quarter which was an increase of 18 percent from Rs 17,535 crore in the corresponding period of the previous year.

The residential segment saw a drop of 24 percent to Rs 6,255 crore from Rs 8,280 in the period. PE investment in the retail real estate increased two-fold at Rs 4,800 crore from Rs 1,988 crore, while the hospitality segment saw double the increase to Rs 3,950 crore from Rs 2,025 crore.

Industrial (warehousing and logistics) segment garnered Rs 1,971 crore, which was up 91 percent from Rs 1,030 crore from a year ago. The PE investment in mixed-use properties and entity fell 29 percent to Rs 1,450 crore during January-September 2019 from Rs 2,032 crore.

Fund commitments across multiple platforms and asset classes that were set up over the last three to four years have now been deployed. The focus for these funds will remain office, retail and warehousing/logistics segments. Fresh Real Estate Investment Trust (REIT) listings are expected to further add depth to the market and attract more investments. The office sector will see even higher investments.

The office segment continued to be one of the most favoured investment asset class and is expected to witness further traction in the near term. There has been an Institutional interest in rent-yielding office assets which are backed by strong demand. 2019 is expected to surpass 2018's leasing numbers for a new historic peak.

Private equity investment volumes for the year to date 2019 figures are much higher compared to YoY basis, even after taking a sequential 13.9% dip. For the quarter ended September, private equity investment was at Rs 9,983 crore. The residential sector saw reduced investment flows and recording over a 60% sequential drop during the quarter.

The real estate market in Mumbai led the quarterly investments at a city-level, with a 24% share, while Hyderabad and Pune were on the third and fourth spot with 9.3% and 9.0% share, respectively in fund inflows. Among all the cities, Hyderabad saw the sharpest quarterly increase with investment inflows increasing by a multiple of 5.6 times on-quarter. Across Maharashtra and Haryana, multi-city investments had 47.3% share in the quarter’s fund inflows with two notable transactions in the office and industrial segments.

One of the biggest transactions during the quarter, was Blackstone Group agreeing to purchase the remaining 50% stake in the office assets of Indiabulls Real Estate in Mumbai and Delhi NCR. Virtuous Retail, the Xander-APG retail platform has also announced an investment of Rs 2,400 crore for acquisition of a land parcel in Thane, Mumbai which will be developed into a retail project as part of a greenfield mixed-use project. Xander Investment Management also acquired Weikfield IT Info Park in Pune, Maharashtra which was another key transaction in the real estate sector.

Siya is a reality consultant working as an independent advisor specializing in the evaluation of properties. Her current focus project is Omkar Project Highway about which further details can be found at https://smartpropertyinmumbai.weebly.com/