Paradigm shift in India investment
Ramesh Nair, CEO & Country Head, JLL India, says in 2017 he has seen a paradigm shift in how India invests its money. “While still reeling under the impact of demonetization, the year saw an introduction of major policy changes…

Ramesh Nair, CEO & Country Head, JLL India, says in 2017 he has seen a paradigm shift in how India invests its money.

“While still reeling under the impact of demonetization, the year saw an introduction of major policy changes as well as the boom of newer and riskier investment avenues, including Bitcoin and other cryptocurrencies,” he says.

In the real estate sector the country saw a roller coaster ride with policy changes leading to speculations regarding the investment scenario. However, with global real estate investment activity broadly tracking last year’s pace, India’s investment market has attracted over USD 5.1 Bn investment flows in 2017.

“Investor confidence was amplified on account of policy reforms including, Real Estate (Regulation and Development) Act, 2016 (RERA), Goods and Service Tax Act (GST), Benami Transactions Bill, demonetisation, leading the way towards a cleaner sector environment,” he averred.

Amongst all sectors, the IT and commercial sector has seen maximum private equity (PE) Inflows in 2017, which amount to approximately 40% of the total investment flows, which is a 10% increase over last year.

PE Investments in residential and townships have slipped down to 35% of total investments in 2017 as compared to 59% last year, primarily on account of policy changes introduced toward the end of 2016. However, a substantial amount is still being invested in the residential sector majorly in the form of debt structures.

An interesting observation is that the warehousing and infrastructure asset class that had received negligible traction till 2016 suddenly saw a boost investments amounting up to 9% of total investments in 2017.

Private equity inflows in Office & IT for 2014-2017 YTD are 150% higher than the previous seven years’ inflows combined signalling increased demand. Vacancy in major commercial corridors across prime office city markets is currently in single digits. Ongoing space requirements point towards healthy demand in the future. Hence, development of commercial projects remains attractive.

PE players are back investing in retail real estate through investments in superior retail malls across cities largely due to the limited supply of retail space across the country. Surprisingly, over 58% of total investments in the Indian Retail Mall universe have been in Tier II cities, signalling at the growth potential of rising consumption is resulting in such investments, Nair said.

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