Private equity (PE) investments in the real estate sector rose by 64 per cent to Rs 19,137 crore in the first six months this year on increased interest from both domestic and global investors, according to a report.
The PE investments in real estate stood at Rs 11,635 crore in the year-ago period, according to property consultant Cushman & Wakefield.
The total number of deals closed during the first six months increased to 57 as against 46 a year ago, it added.
The residential asset class commanded the largest share of 44 per cent in the total investments during January-June 2016 while commercial office asset class accounted for 22 per cent of the investments.
Retail saw a significant increase in their share in investments to 18 per cent in H1 2016 compared to 2 per cent recorded in H1 2015. Hospitality and mixed-use asset classes cumulatively accounted for the remaining share.
The consultant said that 2016 could record the highest PE investments in real estate since 2008 at an estimated Rs 43,600 crore.
“Indian real estate has seen good traction from both domestic as well as global investors on the back of reviving economic confidence breaching previous levels.
“This bull run is expected to continue in the short term with more investments being made in completed/leased corporate assets and other commercial activities such as retail and hospitality and we expect 2016, to be one of the best years in recent past for the real estate sector,” C&W India Managing Director Anshul Jain said.
However, he expected that by mid-2017, there could be a peculiar situation of non–availability of suitable projects for investments, as most of the investible properties would be committed to.
Estimating from the pipeline for the rest of the year, C&W said 2016 is expected to witness the highest PE investments since 2008 through the sale of sizeable stakes in office portfolios by some of the prominent Indian developers.
“The cumulative value of these stakes is estimated to be between Rs 21,500 crore and Rs 24,000 crore. Owing to improving economic outlook and uptick in leasing activity for office spaces, some of the PE firms are increasing their portfolio of office spaces, possibly with an intention to launch their own REITs,” the consultant said.