PE investments in realty up 26% this year
Dec 06, 2013
Source : The Economic Times

HYDERABAD: The value of private equity (PE) transactions in the country’s real estate sector during the first nine months of 2013 was up 26 per cent at Rs 4,716 crore, indicating that funds continue to see India as a an investment destination despite a slowdown in the local market.

This was revealed in a report by real estate consultancy Cushman & Wakefield. In the first nine months of last year, the PE deals in the real estate sector stood at Rs 3,750 crore.

The increase in PE deals was due to a rise in investments in leased income generating office properties by institutional investors, said the report. But the slowdown in the local real estate market continued, it added.

The net absorption in offices was down 15 per cent during the period, vacancies increased and sales were subdued in the residential segment.

This was in part due to slower GDP growth, inflationary pressure and volatility in foreign exchange and stock markets, , the report said. Apart from offshore funds, domestic capital is also being raised and deployed in the income generating office properties, it added. “Despite a slowdown in the local real estate market, funds remain committed to India as a top investment destination with overall private equity investment only expected to increase especially in income yielding assets,” said Sanjay Dutt, Executive Managing Director South Asia, Cushman & Wakefield, in a statement.

With improving sentiments, the deal momentum in the real estate sector is expected to increase in the coming year, he added.

Around 65 per cent of the overall investment during the year happened in the third quarter at Rs 3,078 crore. The residential segment saw a drop of 11 per cent during the January-September period at Rs 2,240 crore, compared with the year-ago period.

Bangalore saw the highest level of announced investment value in 2013 at Rs 1,979 crore, up 79 per cent. At Mumbai, it was down 43 per cent in the total volume of deals worth Rs 720 crore.

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