Private Equity investment in realty rises to Rs 43,704 crore

Private equity (PE) investment in the real estate sector rose 3 per cent to Rs 43,704 crore during the last calendar year on increased interest of foreign investors in commercial properties, property consultant Cushman & Wakefield said.

According to the data, PE investment in office segment declined to Rs 21,890 crore in 2019, from Rs 23,930 crore in 2018, while housing segment saw 22 per cent fall in PE inflows to Rs 7,457 crore during the period under review, from Rs 9,600 crore a year ago.

However, PE investment in retail and warehousing segments increased during last year.

Retail segment attracted Rs 5,500 crore last year as against Rs 1,990 crore in 2018. Warehousing witnessed Rs 3,810 crore worth investment in 2019 as compared with Rs 2,870 crore in the previous year.

"With volumes touching Rs 43,700 crore in 2019, in comparison to Rs 42,440 crore in 2018, confirms the confidence of institutional investors in the Indian real estate market," said Anshul Jain, Country Head & Managing Director, India, Cushman & Wakefield.

Jain further added that "with strong demand in the commercial segment, investor interest has remained robust in this asset class, for core and build-to-core opportunities, despite the tepidness in the residential sector".

Jain expects investment volumes to remain healthy on account of anticipated deployment of fund commitments that have been made across the office and warehousing/logistics platforms.

"In addition, strategic investments in alternative segments like co-living / student housing, co-working, and data centers are likely to garner active interest from institutional investors," he said.

As per the data, foreign investors contributed 72.9 per cent to total investment inflows during 2019. Equity capital infusion formed 80.5 per cent of the total investment inflows during 2019, up from a 64 per cent share in 2018.

"Joint ventures between foreign investors and domestic entities remain a bright spot indicating long term and patient capital being invested into the sector.

Such partnerships aimed at greenfield, brownfield development especially in commercial (office and retail) and industrial segments is a sign of increasing institutionalization in the real estate sector," the consultant said.

Greenfield Development refers to the real estate development of land not previously used for residential, commercial or industrial purpose. Brownfield development mean to start a project based on prior work or to rebuild (engineer) a product from an existing one.

Mumbai topped the annual investment volume with a 32 per cent share, followed by Bengaluru at 14 per cent. Pune had a 7 per cent share in the overall investments for 2019, followed by Hyderabad and Chennai at 6 per cent each.

Cushman & Wakefield is a leading global real estate services firm with 48,000 employees in about 400 offices and 70 countries. In 2017, the firm had revenue of $6.9 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services.