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Realty attracts $6.8 bn Private Equity investments in 2018

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Realty attracts $6.8 bn Private Equity investments in 2018

Investment volume has witnessed a 10.6% year-on-year decline, this was second only to the historical peak investment volumes seen in 2017.

Retail segment investments were slower with the year recording inflows of Rs 1,990 crore, 4.3% of the total.

Demonstrating the institutional investors confidence in Indianreal estate, the sector has attracted inflows of over $6.8 billion or Rs 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 Rs 8,450 crore.

Office real estate led the investment inflows commanding 46.4% of the annual fund flows. The countrys 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 Managementacquired 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 includingAbu Dhabi Investment Authority(ADIA)-Housing Development Finance Corporation(HDFC) for affordable housing, HDFC Prestige Estates for low and mid segment housing, Allianz-e-Shang Redwood (ESR) for logistics and Warburg Pincus-Lemon Tree Hotels for student housing and co-living segments. Interestingly, Hyderabads share in investment volumes rose to 17% from 2% in 2017. Roust leasing activity volumes of 10 million sq ft in 2018, strong pre-commitment of 60% of 2019s upcoming supply preleased and continuing tight vacancies in key office corridors, has led to Hyderabadfinding favourwith institutional investors for quality office assets. Xander, Blackstone, 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 quarters 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 Rs 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 Pincusis planning to form a $1 billion realty platform with Runwal Group for investment in retail-led mixed-use properties.

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