Commercial projects lead the pack as Indian real estate attracts $5 billion PE in 2019: Report

MUMBAI: In the backdrop of robust office space consumption, dropping vacancy levels and rising rentals, Indian commercial real estate retained its Numero Uno position and continued be a favored destination for global institutional investors.


In 2019, Indian real estate attracted more than $5 billion private equity (PE) inflows. More than 66% or $3.3 billion of the amount was infused in the commercial real estate. On the other hand, both retail and residential segments witnessed an uptick in investments in 2019 against the preceding year, as per the data shared by ANAROCK Property Consultants.


As per the real estate news, the most attractive investment destination for PE funds has been the Mumbai Metropolitan Region (MMR). The second-most attractive real estate destination for PE players was the National Capital Region. Together, the two mega regions received PE inflows of $2.7 billion – a 53% overall PE share – in Indian real estate in 2019.


The MD & CEO – ANAROCK Capital, Shobhit Agarwal said, “Total PE inflows in Indian real estate remained more or less the same in 2019 against 2018. However, NCR once again emerged as a major hotbed for private equity activity in 2019. Besides office real estate, the retail sector helped NCR gain traction from both foreign and domestic funds.”


“Residential saw some green shoots of revival in 2019 and this will continue in 2020 as the government’s distress funds are deployed,” he added.


The investors are now showing a keen interest in last-mile funding for stuck housing projects, in sharp contrast to previous years. This will go a long way in relieving residential real estate from its woes, along with the government support of Rs 25,000 crore for stressed projects,


“Given the government’s involvement, last-mile funding is one of the most sought-after products now preferred by several lenders across geographies. Apart from low execution, land title and sales risk, the segment also stands apart due to faster return of the capital with higher than moderate returns,” said Subhash Udhwani, founder of real estate-focused boutique investment bank, Elysium Capital.

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