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Last Updated : | Source: Moneycontrol.com

Foreign PEs pour in $14 bn into real estate from 2015 to September 2019: Report

As much as $8.8 billion of the total foreign investments backed commercial real estate. The residential sector attracted just $1.5 billion of foreign PE in the same period.

The Indian real estate attracted nearly $14 billion of foreign private equity (PE) between 2015 and the third quarter of 2019 out of which nearly $8.8 billion went into commercial realty, followed by $1.7 billion in the retail sector and $1.5 billion into the housing sector, according to a new report.

The logistics and warehousing drew over $1 billion and the remaining investments went into mixed-use developments, as per data released by ANAROCK.

As much as 63 percent (approximately $8.8 billion) of the total foreign investments backed commercial real estate. The residential sector attracted just $1.5 billion of foreign PE in the same period, trailing behind even the retail sector which saw cumulative inflows of $1.7 billion.

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Domestic PE funds pumped nearly $2.4 billion into Indian real estate since 2015, of which nearly 71 percent (approximately $1.7 billion) went to the housing sector.

The residential segment drew approximately $295 million PE funding in the first three quarters of 2019 (against $210 million in the corresponding period last year).

This was a period of considerable stress for the residential segment; domestic funds invested heavily into a sector plagued by issues like delayed/stalled units, low sales and fairly lower yields. This made exiting investments with substantial gains difficult.

The commercial real estate segment, on the other hand, delivered a comparatively stellar performance in the last five years. Steady demand and rising rentals gave foreign investors a decisive edge, it said.

An additional infusion of $1.6 billion between 2015 and the third quarter of 2019 was a mix of foreign private equity and funding by Indian developers or investors who collaborated either at project or entity levels.

Going forward, the Indian commercial real estate will continue to attract PE funds as there is high demand for Grade A office spaces across the top Indian cities.

Logistics, warehousing and retail will continue to witness considerable growth on the back of recently-eased policy norms for the retail sector, aimed at boosting growth and attracting more investments.

Over the short-to-mid-terms, the housing sector - which has the greatest need for liquidity infusions - will retain its 'poor cousin' status and garner much more gradual attention from wary investors. Though the FM recently unleashed an alternative investment fund (AIF) of Rs 25,000 crore to revive languishing housing projects across the country, investors will watch for actual implementation and deployment, the report said.

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First Published on Nov 18, 2019 04:06 pm
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