Private equity firms’ interest in Indian real estate continues unabated as their investment in the sector during the first three quarters of 2019 rose to Rs 39,182 crore, up 19% from a year ago period. Over 83.5% of these funds were infused by them as equity capital indicating their appetite for Indian real estate sector.
Private equity investment volumes for year to date 2019 figures are higher on comparable YoY basis, despite taking a sequential 13.9% dip. For the quarter ended September, private equity investment stood at Rs 9,983 crore, showed data from Cushman & Wakefield India.
The reduced investment flows in the residential sector continued to decline, recording over a 60% sequential drop during the quarter.
The office segment remained the favored investment asset class with expectation of further traction in the near term. Institutional interest in rent-yielding office assets continued to be backed by strong occupier demand with 2019 slated to surpass 2018’s leasing numbers for a new historic peak. With low vacancies and strong demand in key office markets, investor interest in this asset class continues unabated.
Mumbai led the quarterly investments at a city-level, with a 24% share, followed by Hyderabad and Pune with shares of 9.3% and 9.0%, respectively in fund inflows. In fact, Hyderabad saw the sharpest quarterly increase among all cities with investment inflows increasing by a multiple of 5.6 times on-quarter. Multi-city investments (across Maharashtra and Haryana) had a 47.3% share in the quarter’s fund inflows with two notable transactions in the office and industrial segments.
Among major transactions during the quarter, Blackstone Group agreed to buy the remaining 50% stake in the office assets of Indiabulls Real EstateNSE 4.98 % in Mumbai and Delhi NCR having bought a 50% stake earlier in 2018. Virtuous Retail, the Xander-APG retail platform, announced an investment of Rs 2,400 crore for acquisition of a land parcel in Thane, Mumbai for development of a retail project as part of a greenfield mixed-use project. Xander Investment Management also acquired Weikfield IT Info Park in Pune from New Vernon Capital in yet another key office transaction during the quarter.
The successful REIT listing of Embassy-Blackstone platform with the scrip performing well post the listing bodes well for new REIT listings. With players like K Raheja-Blackstone next in line and likely to be followed by others like RMZ and Godrej Properties also contemplating future listings.