Private equity (PE) investments in the real estate sector rose by 72per cent to Rs 257 billion last year, highest since 2008, mainly on fund infusion in the sluggish housing segment.
According to property consultant Cushman & Wakefield, out of the total PE investment in the realty sector during 2015, over Rs 180 billion was in residential segment, which was facing a huge slowdown since last 2-3 years, resulting in liquidity crunch and significant delays in projects execution.
The total PE inflows in the sector stood at Rs 256.83 billion in 2015. “The PE investments were considerably higher by 72 per cent from the previous year and highest since 2008.
The substantial increase in PERE (Private Equity in Real Estate) investments during the year was led by a three-fold jump in investments made in the residential sector.
The total number of deals also rose to 90 during 2015 from 75 in the previous year. Moreover, the average deal size too increased and was noted at Rs 2.90 billion, a rise of 43% on year-on-year basis.
Housing segment attracted the highest share of investments during 2015 with over 70 per cent share in total investments, followed by the commercial office with 21 per cent share.
C&W expects residential sales to “see green shoots” in 2016, owing to falling interest rates regime on home loans and rising income levels especially if the Seventh Pay Commission gets implemented.
C&W Executive Managing Director South Asia Sanjay Dutt said global funds have been selective and have made investments only with companies which have good credentials and a proven track record.
“The trend of higher investments through SPV level deals is likely to continue going forward too in 2016 and overall investments are likely to increase owing to growing funding needs of developers, rising optimism in the Indian economy,” he said.