The real estate sector has attracted the private equity investments worth over Rs 10,080 crores during the latest quarter ended in the month of June, which is driven by the institutional investors’ interest in the office and the retail properties. Even though the inflow has witnessed a 22% year-on-year dip, it has still eclipsed the investments of the second span of the past 11 years and being the second highest it showed data from the Cushman & Wakefield.
During the span, the office sector continued to rise on sequential basis, thereby making up for around 42% of the net inflow share across the key six segments and the same is expected to remain in focus in the forthcoming spans too. “As office space supply and demand continues to experience a robust increase, coupled with the emergence of co-working spaces in a phenomenal way, the investor confidence in the sector will continue to remain intact. Retail also continues to grow strong, with declining mall vacancy rates constituting the heightened investor interest in this sector,” said Anshul Jain, country head & managing director India, Cushman & Wakefield.
The experts say the billow in office investments was an expected trend as the quarter was about to witness the conclusion of few key deals by the private equity majors in this segment. With the government initiating a series of reforms and the institutional investors, those include the pension funds, private equity and sovereign wealth, continue to express a healthy appetite for Indian real estate.
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The key policy decisions, those have resulted in change in the global investors’ perception of the Indian real estate, includes the implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA), the Benami Transactions (Prohibition) Amendment Act, 2016, infrastructure status to affordable housing projects, demonetisation, interest subvention schemes, relaxation of norms to encourage Real Estate Investment Trust(REIT) listings and the Goods and Services Tax.
Office sector recorded the inflows of Rs 4,295 crore, i.e.a 39% increase from the corresponding span from the previous year. This segment constituted almost half the investments which were committed by the foreign investors, the industrial segment had a 10% share in the investments by the foreign investors, and the retail segment constituted 26%.
The average investment deal size has been pushed up to 21% from the past one year to Rs. 560 crores by the stabilised yield-earning assets and competition among global investors for these assets. With the global players like Xander, Brookfield, Blackstone, etc., aggressively building their India real estate portfolio, the segment remained bullish on investment in the first half of 2018.
Among the various regions, the investment influx in Mumbai slipped this quarter with the influx of Rs 2,800 crore, although the country’s commercial capital still receives the highest investments seen among the major 6 cities.The city noted the quarter’s largest transaction with the Brookfield Asset Management thereby acquiring Essar Group’s Equinox Business Park in the BKC for Rs 2,400 crores.
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