Accommodation Times News Service
Despite demonetisation and RERA affecting the realty sector most, private equity investment in real estate (PERE) is prepped to witness an all-time high since 2008 with a likely annual hike of 53% by the end of year, said Cushman & Wakefield in its latest report on the sector. It said that with ‘larger-ticket’ deals happening in December, the investment numbers are expected to touch Rs. 483 billion (USD 7.2 billion) towards the end of month.
The report further added that out of the total influx happening in the realty sector, nearly half (INR 243 billion) is expected to be done for the commercial office sector. This is in contrast to previous years data that saw majority share in the residential sector.
“This increase in PERE in the commercial office sector is spurred by the stable growth prospects of the asset class, which is expected to witness net absorption of at least 30 msf during 2016, similar to 2015 levels. At the same time, supply has been controlled, vacancies in key business districts are decreasing and rentals for prime properties and locations have been increasing’, the report said.
While it said that the IT-BPM sector continues to be the prominent demand driver in majority of the cities, other sectors such as consulting, pharmaceuticals, e-Commerce, engineering and manufacturing were also seen marking their presence in office space.
“Though Bengaluru remains the undisputed leader in office demand, Hyderabad will show the highest growth in office sector demand owing to heightened demand from the IT-BPM sector”, the report asserted.
Commenting on the alleged flailing end-user demand in the residential sector, the report claimed that 2016 (Jan-Sept) saw nearly 16% increase in launch of units across the top eight cities in India. Mumbai, which had a share of 14% last year, is at the peak with share of 21% this year. This was largely made possible by a ‘two-fold increase’ in the launch of units in the PM’s ‘Housing for All’ segment.
“With strong emphasis on affordable housing by the government through ‘Housing for All’ initiative, tax incentives extended by the government, as well as the cautious approach by end-users in other segments, developers are expected to look to increase their relevance in the affordable segment, especially as there is huge pent-up demand in this segment”, the report concluded.