DELHI: Private equity investment in the real estate sector increased by 13 per cent to Rs 7,000 crore last year on higher inflows in the residential segment, global property consultant Cushman & Wakefield said.
"Total inflows from private equity funds in the real estate sector for 2013 was recorded at Rs 7,000 crore (US $ 1.2 billion), an increase of 13 per cent compared to 2012 (Rs 6,200 crore/US $ 4 1.1 billion)," C&W said in a statement.
Overall private equity investments across sectors in India have also increased by 11 per cent to US $ 10.5 billion in 2013 from US $ 9.49 billion in 2012.
The consultant attributed the increase in private equity inflows to "rising investments in residential assets and other sectors like retail and hospitality". The total PE investments in the housing segment for 2013 was recorded at Rs 4,050 crore (US $ 650 million), an increase of 42 per cent compared to 2012 levels.
While the number of deals has increased to 40 last year, compared to 34 in 2012, the average deal size has declined marginally at about Rs 175 crore (US $ 28 million).
C&W Executive Managing Director South Asia Sanjay Dutt said: "The residential asset class continues to provide tremendous potential for growth in the coming years. With housing requirements growing across cities and funds investing in the asset class primarily in the form of NCDs providing fixed returns, investments in the right project have the potential to yield healthy returns."
Dutt noted that a number of large global investors, including sovereign funds, have taken the first step by partnering with successful local investors and developers for investing in the Indian real estate market.
"This is expected to result in high transaction activity especially in income yielding commercial office assets during 2014," he added.
Bengaluru continued to witness the highest level of transaction activity in 2013 with overall investments of about Rs 2,200 crore (US $ 350 million), though it declined by 33 per cent from 2012. Both Pune and NCR witnessed an increase in transaction volume in 2013.
C&W said: "Overall investments in Pune were Rs 1,460 crore, recording an increase of over four times from 2012, driven primarily by investments in leased office assets. Transaction volume for NCR in 2013 was more than double that of 2012 at about Rs 1,650 crore (US $ 260 million), all of which was in the residential asset class."
Mumbai witnessed a fall of about 15 per cent in investments for 2013 to Rs 1,100 crore (US $ 180 million). However, the investment activity in the city is expected to increase with a few large deals in office assets in the pipeline.