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PE inflows in real estate at over $5 billion in 2019: Study

MMR and NCR were the favoured regions for private equity investors in 2019 as they received close to $2.7 billion of PE funds.

India's real estate sector attracted over $5 billion worth of private equity inflows in 2019, recording a marginal drop of 2 percent against the preceding year, according to a study by Anarock.

MMR and NCR were the favoured regions for private equity investors in 2019 as they received close to $2.7 billion of PE funds. Previously in 2018, rather than NCR, it was Hyderabad that was on top in the radar of private equity investors, the study revealed.

The IT hubs of Pune and Bengaluru attracted private equity funds of approximately $390 million and $615 million respectively in 2019. Both cities saw inflows rise by 210 percent and 47 percent, respectively in a year.

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Hyderabad attracted private equity funds of just $440 million in 2019 against $1.1 billion in 2018. This drop was expected as 2018 was a one-hit wonder rather than a steady trend.

The commercial segment continued to lure investors in 2019, with total PE inflows crossing $3.3 billion - though reducing by 13 percent on yearly basis. Meanwhile, both the retail and residential segments saw an uptick in investments in 2019 against the preceding year.

The retail sector was a major draw for PE funds in 2019, receiving total PE inflows of $970 million as against $355 million in 2018 – an annual rise of over 170 percent.

The residential sector received PE inflows of $395 million in 2019 against $265 million in 2018.

The high potential of logistics and warehousing notwithstanding, this segment attracted about $200 million worth of PE funds - a drop of nearly 50 percent against the previous year.

Mixed-use developments saw inflows of approximately $155 million in 2019, as against $310 million in 2018.

"Total PE inflows in Indian real estate remained more or less the same in 2019 against 2018. However, NCR once again emerged as a major hotbed for private equity activity in 2019. Besides office real estate, the retail sector helped NCR gain traction from both foreign and domestic funds," said Shobhit Agarwal, MD & CEO – ANAROCK Capital.

The retail segment also garnered considerable attention from private equity, based on the high demand for organised retail spaces across the country. Residential saw some green shoots of revival in 2019 and this will continue in 2020 as the Government’s distress funds are deployed.

"In sharp contrast to previous years, investors are now showing a keen interest in last-mile funding for stuck/delayed residential projects. This, along with government support of Rs 25,000 crore for stressed projects, will go a long way in relieving residential real estate from its woes," he said.

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First Published on Jan 8, 2020 07:18 pm
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