Global PE investment to rise by Rs. 12,000 crore says report

By Accommodation Times News Services

reits investment implicationsIndian real estate market has seen a rise in global private equity investment, as second half of 2014 is expected to see around Rs. 7, 900 crore investment against the first half of the year, which saw Rs. 4,100 crore. As per a report by Property consultant Cushman & Wakefield, global PE investment in India will increase up to Rs. 12,000 crore by the end of this year.

They said global PE players find real estate in India worth investing for good returns, the funds are being raised mainly for housing projects and leased office purchases. Second half of this year witness a good result following the big deals taking place in the commercial office space during the period. As projects in the commercial office space are more economically viable, PE investments have been betting on them due to high occupancies and the trend is set to continue till year-end.

“Clarity in government process will be critical to the investment market. Recent announcements by the central government will spur investments into the sector,” said Cushman & Wakefield’s South Asia managing director Sanjay Dutt on the occasion.

Many sovereign and pension funds are pumping funds into the Indian real estate like All Pensions Group (APG Group), Abu Dhabi Investment Authority (ADIA), Qatar Investment Authority (QIA), Canada Pension Plan Investment Board (CPPIB), State General Reserve Fund of Oman (SGRF) and GIC of Singapore.

Bangalore topped PE transactions in the first half of 2014 with Rs.2,500 crore Aas against just Rs.103 crore in the corresponding period year ago. Whereas, Mumbai also saw healthy investments worth Rs.1,140 crore though largely in the residential sector.

PE investments in Mumbai shot up three times in first six months of this year over same period year ago, while transactions in National Capital Region (NCR) and Pune in Maharashtra were Rs.580 crore and Rs.167 crore.

Investments were spread across the sector, with commercial office accounting for the major chunk (57 percent), followed by residential (28 percent) and retail (15 percent) asset classes.

PE investment (Rs.4,100 crore) in first half (January-June) was not only more than double of Rs.1,650 crore in same period of 2013, but also the highest since like period of 2009 when a whopping Rs.4,950 crore ($1 billion) was invested then.

Secondly, number of deals in first half of 2014 increased to 28 from 13 in same period of 2013, with the average deal size going up 16 percent to Rs. 146 crore.

Investment value in the residential segment at Rs.2,357 crore during first half constituted 60 percent of the overall investments, as PE funds are viewed favourably by developers.

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