PE investment in real estate up 177 percent in H1

Kolkata, Aug 25 (IANS) Private equity (PE) investments in the country’s real estate sector increased by 177 percent at Rs.11,080 crore during the first six months of this year as against an investment of Rs.4,000 crore during the corresponding period last year.

According to a report from real estate consultancy firm Cushman and Wakefield, PE investments in real estate witnessed the highest inflows during the January-June period this year since 2008 owing to increased exposure from both domestic and foreign funds.

The report said the residential sector accounted for 56 percent at Rs.6,328 crore of the total PE investments while the commercial office sector drew 41 percent of the investment at Rs.4,528 crore.

Total number of deals in the sector stood at 39 for the January-June period — an increase of 44 percent as compared to 27 during the same period a year ago.

The consultancy firm said that along with the increase in its number, the average deal size nearly increased by 93 percent and was noted at Rs.290 crore on the average compared to Rs.150 crore during the first six months of 2014.

“The investment trend is likely to continue upwards owing to improved macro-economic factors. Furthermore, an enabling policy environment, healthy demand for office space and a recovery in residential demand will all lead to continued inflows of investments in India from PE funds in the coming years,” the company’s executive managing director of South Asia, Sanjay Dutt said in a statement.

Chennai concluded the top deal wherein the US-based New Vernon Capital invested Rs. 2,420 crore in SP Infocity IT Park. The city also recorded the highest level of transaction volume with the total investment standing at Rs.3,778 crore. Majority of the investments in the southern metropolis were in commercial office assets.

The country’s commercial capital, Mumbai accounted for the second highest share in PE investments with the volume standing at Rs.3,266 crore. The city also bagged the second largest deal wherein the US-based Blackstone — the world’s largest portfolio investment manager — invested Rs.1,060 crore to buy 247 Park in IT corridor of Vikhroli in Mumbai.

The nation’s IT capital, Bengaluru accounted for the third highest share of total PE investments with Rs.1,954 crore. Singapore-based Equis Funds Group and Piramal Fund emerged as the leading investors in Bengaluru, making investments in excess of $100 million each in residential assets.

According to the company, leased office assets such as IT Parks and IT Special Economic Zones attracted significant interest from foreign investors as they continue to ramp up their portfolio of office assets and accounted for more than 90 percent share in total investment volume in office assets.

Furthermore, residential assets in India recorded the highest ever PE investment since 2008 as domestic funds continue to increase their exposure to residential assets.

As per the data from the consultancy company, domestic PE funds led the investment in residential assets at 69 percent in total investment volume in residential assets.

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