Realty Sector Attracts $6.8B PE Funds in 2018

Friday 8th February, 2019

Article Details
Publication  The Economic Times
Source  Kailash Babar
CCM  50.66
Edition  Ahmedabad | New Delhi
Supplement   NA
MAV  385,016
Language  English
Page  19
Circulation  126,805

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Realty Attracts $6.8b PE Investments in '18
Kailash.Babar
@timesgroup.com
Mumbai: Demonstrating the institutional investors' confidence in Indian real estate, the sector has attracted inflows of over $6.8 billion or ?46,268 crore from private equity funds in 2018. Although the investment volume has witnessed a 10.6% year-on-year decline, this was still second only to the historical peak investment volumes seen in 2017, showed data from Cushman & Wakefield.
The decline was also attributed to the Non-Banking Finance Companies (NBFC) liquidity crisis that brought funding from these vehicles to a virtual standstill in the last quarter, which ended up impacting the annual numbers. Investment flows during the last quarter declined 23.4% to ?8,450 crore.
Office real estate led the investment inflows commanding46.4% of the annual fund flows. The country's commercial capital Mumbai maintained its highest share with 27% investments, as was the case in the previous year. The city recorded the largest transaction for 2018 with US Private equity major Blackstone Group acquiring a 50% stake in two office assets of Indiabulls Real Estate. In another marquee transaction, Brookfield Asset Management acquired Equinox Business Park in Mumbai.
"Institutional investors' appetite for Indian real estate continues to be strong led by office properties-...We expect the private equity trend to be cautiously positive in 2019, especially given the slowdown in NBFC market provided there are no global economic or political shocks," said Anshul Jain, Country Head & Managing Director, Cushman & Wakefield India.
The year witnessed formation of several investment platforms including Abu Dhabi Investment Authority (ADIA)- Housing Development Finance Corporation (HDFC) for affordable housing,
Steady Growth
Private equity funds invested 46,268 crore in Indian real estate in 2018
tan-
46.4%
of the fund flow was into office real estate
HYDERABAD'S SHARE IN investment volumes rose to 17% from 2% in 2017
HDFC - Prestige Estates for low and mid segment housing, Alli-anz-e-Shang Redwood (ESR) for logistics and Warburg Pincus-Lemon Tree Hotels for student housing andco-living segments.
Interestingly, Hyderabad's share in investment volumes rose to 17 % from2% in 2017. Roust leasing activity volumes of 10 million sq ft in 2018, strong pre-commitment of 60% of 2019's upcoming supply preleased and continuing tight vacancies inkey office corridors, has led to Hyderabad finding favour with institutional investors for quality office assets. Xander, Black-stone, Ascendas India Trust and Allianz-Shapoorji Pallonji platform committed Rs 6550 crore across four separate office transactions in Hyderabad.
Chennai was third with a 13% share in investments with the city standing out for the last quarter's largest private equity transaction with Mapletree Investments acquiring SP Infocity from CPPIB-Shapoorji Pallonji.
Retail segment investments were slower with the year recording inflows of ?1,990 crore, 4.3% of the total. Investors' interest in this asset class along with fund raising activity is likely to be maintained in the year ahead. Warburg Pincus is planning toforma$l billion realty platform with Runwal Group for investment inretail-led mixed-use properties.
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