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PE investments in real estate increases 22%

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PE investments in real estate increases 22%

Times of India:  November, 2016

Mumbai: Private equity investments in real estate from January to September 2016 touched Rs 283 billion (US$ 4.24 billion), a 22% increase during the same period last year.

Cushman & Wakefield's latest report on Private Equity investments in Real Estate (PERE), released on Thursday, said about Rs 92 billion (US$ 1.4 billion) of these investments was recorded during the third quarter of 2016.

Mumbai attracted 43% of the total investments and retained its top position in PERE. Delhi NCR was a distant second, accounting for 27% of the share.

"While Mumbai witnessed inflows of about Rs 121,130 million (US$ 1.8 billion), Delhi NCR received INR 77,300 million (US$ 1.2 billion),'' said the report.

For both these cities, domestic funds accounted for the majority share in PERE during 2016. Hyderabad too is fast emerging as one of the hotspots for PERE.

"PERE in Hyderabad increased to Rs 19,490 million (US$ 292 million) from a mere Rs 800 million (US$ 12 million) recorded during the same period of 2015,'' said Cushman & Wakefield.

The average deal size increased from Rs 2.75 billion (US$ 41 million) in Q2 2016 to Rs 2.87 billion (US$ 43 million) in the third quarter of 2016.

Residential assets witnessed over 73% (Rs 66,750 million / USD 1 billion) of the total PERE during Q3. Within residential investments, Mumbai was the most preferred location that accounted for 63% of the share, followed by Delhi-NCR and Bengaluru accounting for 18% and 15% of the share, respectively. Domestic funds were most active investors in residential assets and accounted for 82% of the total investments made in the asset class. The cumulative investments in the residential assets increased 9% q-o-q in the third quarter of 2016.