While Indian real estate attracted more than $5 billion in private equity inflows in 2019, firms from US, UAE and Singapore remain bullish on the sector even as Japanese and South Korean investors are evaluating options in 2020.
As per data made available by Anarock Capital, US-based Blackstone remains bullish on Indian real estate and pumped in over $1.8 billion in 2019 over $1.1 billion in 2018. Others included US-based Hines, UAE-based ADIA and Lakeshore and Singapore-based Xander Group.
A few Japanese investors or corporates have been evaluating the Indian real estate investment options and we can expect them to get into gear in 2020, along with pension and insurance funds, it said.
The interest of the Japanese firms is not limited to Mumbai alone but is also in other top cities such as Delhi-NCR. Bengaluru, Hyderabad, Pune and Chennai.
Interestingly, South Korean companies may also be evaluating the Indian commercial market.
South-Korea-based Mirae Asset Financial Group is showing interest in Indian commercial market but it’s still too early to say when and where, experts said.
As per data from Anarock Capital, the momentum of equity investments from foreign investors into real estate restarted from 2014 onward. Since then, Indian real estate sector has received $16.6 billion worth of foreign investments.
"In this period, investors’ focus has remained largely on big-ticket income-yielding commercial and retail assets – 72 percent in aggregate. This period also saw the entry of significant Canadian pension funds into Indian real estate, either directly or through platform deals with Indian counterpart. While Singapore-based funds led by GIC remained very active in this period, US-based funds led by Blackstone continued their love affair with India real estate and invested more than 5.7 bn dollars in the same period," said Shobhit Agarwal, MD & CEO – ANAROCK Capital.
In 2020, funding focus is expected to remain on Grade A income-generating assets along with last-mile funding opportunities in residential projects.
"A few Japanese investors/corporates have been evaluating Indian real estate investment options and we can expect them to get into gear in 2020, along with pension and insurance funds. These funds are inherently patient and come with longer investment tenures. As such, they will play a significant role in providing the long-term solutions Indian developers now need. In fact, 2020 promises to be an action-packed year for Indian real estate funding," he said.
MMR and NCR were the top favourites for private equity investors in 2019; together, the two regions received close to $2.7 billion worth of PE funds, comprising a whopping 53 percent overall share. Previously in 2018, rather than NCR, it was Hyderabad that was on top in the radar of private equity investors, Anarock Capital said.
The commercial segment continued to lure investors in 2019, with total PE inflows crossing $3.3 billion - though reducing by 13% on yearly basis. Meanwhile, both the retail and residential segments saw an uptick in investments in 2019 against the preceding year, it said.
The residential sector received PE inflows of 395 mn dollars in 2019 against 265 mn dollars in 2018, the report said.
The high potential of logistics and warehousing notwithstanding, this segment attracted about 200 mn dollars PE funds - a drop of nearly 50 percent against the previous year.
Mixed-use developments saw inflows of approximately 155 mn dollars in 2019, as against 310 mn dollars in 2018, it said.
"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," Agarwal added.