PE Investment In Indian Realty Drops 34% in Q2, 2019: Cushman & Wakefield

New Delhi: Private equity (PE) investment in real estate in the country declined by 34 percent at Rs 11,602 crore in the second quarter of the current calendar year as compared to the same period of 2018.

Office real estate segment remained hot investment target, getting Rs 6,280 crore from institutional investors. It accounted for 54 percent share of the total investments in the second quarter of 2019, according to a report by property consultant Cushman and Wakefield.  

Strong office demand, increasing rents and low office space vacancies resulted in the good momentum in PE activity. 

“The success of the Blackstone-Embassy REIT has also injected momentum in the commercial office investment space with key learnings for institutional investors around portfolio creation, management and returns”, the report stated.

Retail and warehousing/logistics sectors attracted 12 percent and 8 percent share respectively, in the Q2 2019 PE fund flow.

At a city level, Mumbai got the highest investment of Rs 6,100 crore with 52.6 percent share of the total funds during Q2 2019. 

Maximum City was followed by Pune and Delhi NCR attracting 12.5 percent 12 percent of the fund flows respectively. Multi-city investments accounted for 15 percent of the quarterly fund flows. All of multi-city investments were in the office sector. 

Foreign investors accounted for 59 percent share of the total investment in Q2 2019. About 21 percent share was contributed by fund investments through the platform route. The domestic lenders were mostly absent with a virtual standstill in NBFC lending. However, global PE-backed NBFCs scouted for the right opportunities in the residential market during Q2, 2019.

"We expect that the activity in the commercial sector, primarily office shall continue on a strong footing with retail platforms and acquisitions of key retail developments also on the anvil. Warehousing/logistics is likely to find strong investor support through existing dry powder and plans being firmed up by global players. It may still be early days for a quantum increase in PE investments in alternatives such as co-living and student housing but one can expect action in the significant yet untapped rental housing space," said Anshul Jain, Country Head & Managing Director, Cushman and Wakefield India