The real estate sector witnessed private equity (PE) inflows of $3.9 billion in the first six months of 2019, recording a 26% rise over the corresponding period last year, a report released by Colliers International has said.
“This 26% increase in inflows over the corresponding period last year signals rising confidence of institutional investors in India’s grade A offices, retail properties and the warehousing sector. Investors are scouting for investment-ready assets in core office locations in Mumbai, Delhi-NCR, Bengaluru, and Hyderabad, which together accounted for about 77% of the office leasing activity in 2018,” the report said.
The average deal size of the commercial office investments increased by 66% to $168 million in the first half of 2019.
Colliers also pointed out that foreign funds remain active in the real estate market, with inflows from such investors rising 28% in H12019.
While foreign funds continue to be active in the commercial office space, they are also investing into the logistics sector. Some recent funds in this space include Logos, Morgan Stanley and the Warburg Pincus-backed developer e-Shang Redwood, the report said.
During the first six months of the year, investments in commercial office assets accounted for 42% share of total investments. Funds are evaluating grade-A rent-yielding assets, led by an upswing in occupier demand.
Mumbai accounted for the highest share during the first half of 2019, led by two deals by PE major Blackstone.
Pune also attracted notable investments during the period, led by office sector, followed by residential assets and retail malls.
During H12019, investors pumped in $1.2 billion into the retail sector, accounting for 31% share.
Investors are putting their buck behind India’s growth in malls, as 100% FDI in single-brand retail has encouraged brands to set up shop in India, despite the rapid growth of e-commerce, the report said. Foreign funds
have formed partnerships as they look to grab a piece of the burgeoning Indian market.