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The total value of private equity transactions in the real estate sector in the first three quarters of 2013 was Rs 4,716 crore, an increase of 26 per cent over the first three quarters of 2012 at Rs 3,750 crore, according to the findings of real estate consultancy Cushman & Wakefield’s.
In its report on private equity (PE) investments in real estate, it said the increase in investments was in spite of the slow pace of growth in the real estate sector. The net absorption in offices was down 15 per cent, vacancies increased and the sales were subdued in the residential segment.
This was in part due to slower GDP growth, inflationary pressure, volatility in forex and stock markets, upcoming elections and policy impact, it stated.
Income generating office properties
The healthy increase was primarily due to a rise in investments in leased income generating office properties by institutional investors.
Apart from offshore funds, domestic capital allocated for income generating office properties is also being raised and deployed. This increases the market size of eligible stock, given the regulatory constraints for offshore funds, the report said.
Sanjay Dutt, Executive Managing Director South Asia, Cushman & Wakefield, in a statement said: “Despite a slowdown in the local real estate market, funds remain committed to India as a top investment destination with overall private equity investment only expected to increase especially in income-yielding assets.”
Deal momentum may pick up
Both domestic and foreign funds with a proven track record have become increasingly successful in raising capital. With improving sentiments, deal momentum in the real estate sector is expected to increase in the coming year, he felt.
About 65 per cent of the overall investment during the year was witnessed during the third quarter at Rs 3,078 crore. The residential segment witnessed a drop of 11 per cent at Rs 2,240 crore.
Bangalore witnessed the highest level of announced investment value in 2013 at Rs 1,979 crore, up 79 per cent. Mumbai witnessed a decline of 43 per cent in the total volume of deals at Rs 720 crore in the first three quarters of 2013.
>rishikumar.vundi@thehindu.co.in
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