Real Estate

At $3.3 billion, commercial is top real estate draw for PE funds in 2019

Anil Urs Bengaluru | Updated on January 08, 2020 Published on January 08, 2020

Mumbai, NCR remain hottest investment destinations: Anarock

Commercial real estate maintained its numero uno position in attracting $3.3 billion in private equity (PE) funding in 2019, against $3.8 billion in 2018. The retail realty sector was a major draw for PE funds in 2019, receiving total inflows of $970 million, against $355 million in 2018 — a rise of over 170 per cent.

The residential sector received PE inflows of $395 million in 2019, against $265 million in 2018. The high potential of logistics and warehousing notwithstanding, this segment attracted about $200 million in PE funds — a drop of nearly 50 per cent against the previous year. Mixed-use developments saw inflows of about $155 million in 2019, against $310 million in 2018.

In all, Indian real estate attracted more than $5 billion in PE inflows in 2019, recording a marginal drop of 2 per cent against the preceding year, revealed Anarock’s latest study.

Shobhit Agarwal, MD and CEO, Anarock Capital, said: “Among the cities, MMR (Mumbai Metropolitan Region) and NCR (National Capital Region) were the top favourites for PE investors in 2019; together, the two regions received close to $2.7 billion in PE funds, accounting for a whopping 53 per cent of the overall share. In 2018, rather than NCR, it was Hyderabad that was on top in the radar of PE investors.”

City-wise trends

While MMR retained the top slot, it was NCR that stood out in 2019, becoming the second most attractive real estate destination for PE players. Together, the two regions received realty PE inflows of $2.7 billion in 2019, accounting for a massive 53 per cent of the total.

MMR saw a 19 per cent jump in total PE inflows to $1.8 billion, from over $1.5 billion in 2018. NCR saw total PE inflows of over $845 million in 2019, against just $195 million the previous year.

The IT hubs of Pune and Bengaluru attracted PE funds of about $390 million and $615 million, up 210 per cent and 47 per cent, respectively.

Hyderabad, the showstopper of 2018 with $1.1 billion in PE funds, attracted just $440 million in 2019. This drop was expected as 2018 was a one-hit wonder rather than a steady trend. PE players largely steered clear of the Chennai real estate market in 2019. The city saw inflows decline by 45 per cent, from $675 million in 2018 to $370 million in 2019. Kolkata failed to garner any PE interest in 2019 as well. There were no PE investments in both the years.

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Published on January 08, 2020
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