New milestone for Real estate in India likely; PE inflows may hit $4 bn in 2017

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Mumbai | Updated: September 19, 2017 5:43:38 AM

This spurt is mainly led by the $1.8-billion deal signed between GIC and DLF. Excluding this transaction, the total would be in the range of $3.1 billion to $3.2 billion, pretty much the same as last year.

The flow of private equity (PE) capital into the real estate sector is expected to touch billion at the end of the year, setting a new milestone, a report released by property consulting firm Knight Frank said.

The flow of private equity (PE) capital into the real estate sector is expected to touch $4 billion at the end of the year, setting a new milestone, a report released by property consulting firm Knight Frank said. This spurt is mainly led by the $1.8-billion deal signed between GIC and DLF. Excluding this transaction, the total would be in the range of $3.1 billion to $3.2 billion, pretty much the same as last year. Still, at $4 billion, investments are set to be the highest since 2010. The report has also pinpointed how financiers shied away from development sites, which means early-stage investments as fund managers no longer want to take up execution, approval or marketing risks.

Accordingly, the share of PE investments into residential projects declined from 50% in 2011 to 28% in 2016 and to a meagre 4% so far in 2017. In contrast, the office market that accounted for 29% of PE funds in 2011, now stands at almost two-thirds (66%) of the investments in Indian real estate. Pre-leased office spaces, industrial and warehousing, as well as leading retail real estate projects are attracting the bulk of the interest of major global sovereign and pension funds. Interestingly, sovereign funds mainly invested in the office market while pension funds were split between retail and industrial or warehousing assets, the report said.

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