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Demonetisation and RERA changed Real Estate dynamics

Demonetisation and RERA (Real Estate Regulatory) have basically changed the dynamics. It has specially hit demand, End user markets have performed better than investor/speculator markets. Protect consumers have think that RERA will come into effect most states by May 2017. “That will extend working capital cycles. But implementation is the key and developers are holding back new launches till final implementation‚ÄĚ. Developers prefer to restrict launches to clear inventories in on-going projects.

Commercial sector is also positive with 5% to 10% rent hikes. There is a limited supply o Grade A commercial real estate assets. It also sees retail and warehousing as possible dark horses. Good quality retail malls enjoy 10% vacancy while rent growth tracking trading density growth. The warehousing sector is attracting interest from investors.
Real estate market is probable to reach $180 billion by 2020 from $93.8 billion in 2014. Rise of nuclear families, rapid development and rising household income are likely to endure the key drivers for growth in all circles of real estate, including residential, commercial and retail.

For the period January to September 2016, total private equity (PE) investments in the real estate sector were detailed at $4.24 billion, showing a 22% increase compared to the same period last year. During the third quarter of 2016, accumulative investment in residential assets increased at 9% on a quarter-on-quarter basis. Government has also higher FDI limits for townships and settlements development projects to 100%.

March 2, 2017 / by / in , , , , , ,
Private Equity Investment in real estate at 9 year high in 2016

During 2016, Private Equity Investment in Real Estate (PERE) increased by 26 percent with Rs 399 billion recorded in 2016 and Rs 316.7 billion in years 2015. Private Equity Investment in the sector has a hit a nine year high. The highest share of inflow was taken by Mumbai at 32 percent of the total private equity investments in Real Estate (PERE).

The average deal size increased to Rs 3.4 billion from 2.8 billion 2015, signing improved confidence amongst investors to make larger investments into the Indian real estate sector. During 2016, PE inflows into the housing sector increased by 5 percent. Domestic funds were most active investors in housing and accounted for almost 80 percent of the total investments.

Investment in commercial office assets were lower than the previous year, as a few large deal of office part initiated during in 2016 are still in active discussion and likely to close this year.

Last year 2016 was one of the best years for the organised retail real estate sector, with the sector attracting Rs 72 billion of PE investments. PE inflows into malls hiked seven times since 2015 levels on back of rising interest from institutional investors and funds looking to invest in top- grade leased malls with low vacancy levels. Recent efforts by the government to regulate the sector have been saw positively by investors who are now looking at the long term potential of the Indian market.

February 17, 2017 / by / in , , ,