Private equity investment in real estate fell 4.6 per cent to nearly Rs 9,600 crore during the January-March period of this year even as office segment saw the highest inflow since 2009, according to property consultant Cushman & Wakefield. Office segment witnessed private equity (PE) investment worth Rs 5,600 crore in the first quarter of 2017 calendar year as against Rs 2,900 crore in the year-ago period. PE investment in housing also increased but fell sharply in retail and mixed-use developments.
PE investments in residential segment went up to Rs 3,600 crore from Rs 2,300 crore earlier. The maximum decline was seen in retail as investors are very cautious about putting in money in this segment. Most developers are extremely sensitive towards creating retail space due to the changing dynamics of the market.
Mixed–use segment also witnessed fall in total value of investments. Retail segment attracted only Rs 15 crore private equity investment against Rs 1,900 crore, while mixed-use development saw PE inflow of only Rs 300 crore from Rs 2,500 crore earlier.
“Overall private equity investment in real estate declined by a marginal 4.6 per cent in Q1 2017 to Rs 9,590 crore from Rs 10,050 crore in Q1 2016,” C&W said. During Q1 2017, Mumbai was the preferred location for investments, accounting for 49 per cent of the total inflows at Rs 4,700 crore. Within Mumbai, commercial office assets accounted for the majority share at 77 per cent.
Cushman & Wakefield India Managing Director Anshul Jain said the record investment in office assets indicates investors’ confidence in this asset class. “The office space is expected to continue to see more interest from the investors in the coming years. By the end of the year, we are expected to see at least 2-3 large portfolio level deals that would be further pushing the total PE investment in office market,” he added.
Jain said these can be seen as signs of maturity of the market and a commitment from the funds for long-term partnership with developers.