Private equity investment in real estate up 15%

PE inflows into the residential sector more than doubled to Rs 8,518 crore ($1.32 billion), backed by a large platform transaction between HDFC and Abu Dhabi Investment Authority

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Mumbai: Private equity (PE) investment into real estate increased by 15% to Rs 16,530 crore during January-March period driven by a sharp jump in inflows in the residential segment, according to property consultant Cushman & Wakefield.

The PE investment in real estate stood at Rs 14,340 crore in the year-ago period.

“Private equity inflows into real estate rose 15% year-on-year to Rs 16,530 crore ($2.6 billion) during the first quarter, eclipsing the inflows of the first quarter of the previous 11 years,” Cushman & Wakefield (C&W) said in a statement.

The housing sector gained prominence in inflows with the highest ever inflows in 10 quarters, as investors look to gain from government incentives in affordable housing, it added.

PE inflows into the residential sector more than doubled to Rs 8,518 crore ($1.32 billion), backed by a large platform transaction between Housing Development Financial Corporation (HDFC) and Abu Dhabi Investment Authority (ADIA).

Office segment saw a decline in PE investment at Rs 6,100 crore from Rs 10,160 crore during the period under review. The decline in investments is due to the postponement of the closure of certain notable transactions to forthcoming quarters.

“The strong inflow level is a testimony to the attractiveness of the Indian real estate market for institutional investors. Affordable housing projects continue to see interest from institutional investors, driven by strong end-user demand and government incentives for both developers and homebuyers,” C&W India Country Head & MD Anshul Jain said.

He said the inflows into this segment will further rise over the next few years.

“During the remaining part of this year, we are also likely to witness some marquee deals in the office sector by private equity majors (including pension and sovereign funds), amidst strong leasing and limited availability of quality assets in core markets,” Jain said.

The industrial and warehousing sector, backed by key economic reforms (GST, infrastructure status to logistics, 100% FDI in e-commerce marketplace) is also emerging as a compelling opportunity for investors, he said.

The C&W report said that the country’s buoyant office sector continues to attract heightened interest from foreign investors who are building up a portfolio of rent-yielding assets.

The sunshine sector of industrial and warehousing received inflows of Rs 350 crore in a logistics park near Chennai as part of a platform formed between Ascendas-Singbridge and Firstspace Realty. Hospitality sector attracted Rs 1,200 crore PE investment while the retail real estate was able to garner only Rs 250 crore.

Mumbai witnessed the highest investments during the quarter with inflows of Rs 6,330 crore, primarily led by the office sector.

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