The passage of RERA (Real Estate Regulation & Development Bill) and GST is set to boost private equity (PE) flows into the real estate market.

“In 2016, equity investment was seen on a return journey to India. After the change in its regulatory framework, the country is now looking way more attractive to investors — both foreign and domestic — than ever before. 2017 is expected to see more of it,” said Shobhit Agarwal, Managing Director – Capital Markets & International Director, JLL India.

PE inflows into real estate in calendar 2016 stood at ₹38,000 crore, an increase of 62 per cent as compared with ₹23,500 crore in 2015.

Investment pattern

Agarwal said, “Out of the entire sum, ₹13,500 crore was investment via pure equity while the rest was via different structures of debt. Even in terms of pure equity, 2016 saw an impressive increase of 29 per cent year-on-year.” PE inflow in the second half of 2016 saw a 121 per cent increase from the 2H of 2015. “This is mainly due to increased confidence shown by investors post the RERA and GST,” Agarwal said.

Though the historic high of 2007 (in terms of total PE inflows) was not breached, last year proved to be the second best year.

“This year may even turn out to be slightly better than 2016 – despite Brexit and the outcome of US presidential elections – thanks to a strengthening and modernising economy and India’s growing reputation as an attractive investment destination,” Agarwal said.

“Economic and political stability, liberalisation of the FDI policy by the Modi government and the resultant improvement in the investor community’s sentiment are also some of the factors working in Indian real estate’s favour,” he added.

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