India’s real estate sector attracts over $5 billion worth of private equity inflows in 2019: Study
According to a study by Anarock, India’s real estate sector attracted over $5 billion worth of private equity inflows in 2019. It recorded a marginal drop of 2 percent as compared to the preceding year.
In 2019, MMR and NCR were the favored regions for private equity investors, as they received close to $2.7 billion of PE funds. As per the study, Hyderabad was on top in the radar of private equity investors in 2018.
On the other hand, the IT hubs of Pune and Bengaluru attracted private equity funds of approximately $390 million and $615 million respectively in 2019. Both cities witnessed inflows rise by 210 percent and 47 percent in a year, as per the real estate news.
Against $1.1 billion in 2018, Hyderabad attracted private equity funds of just $440 million in 2019. This drop was expected as 2018 was a one-hit wonder rather than a steady trend. Apart from this, the commercial segment continued to lure investors in 2019, with total PE inflows crossing $3.3 billion – though reducing by 13 percent on yearly basis.
Meanwhile, both the retail and residential segments recorded an uptick in investments in 2019 against the preceding year. The retail sector was the main draw for PE funds in 2019, receiving total PE inflows of $970 million as against $355 million in 2018 – an annual rise of over 170 percent.
The residential sector received PE inflows of $395 million in 2019 against $265 million in 2018. This segment attracted about $200 million worth of PE funds – a drop of nearly 50 percent against the previous year, notwithstanding the high potential of logistics and warehousing.
Mixed-use developments saw inflows of approximately $155 million in 2019, as against $310 million in 2018.
The MD & CEO of ANAROCK Capital, Shobhit Agarwal said, “Total PE inflows in Indian real estate remained more or less the same in 2019 against 2018. However, NCR once again emerged as a major hotbed for private equity activity in 2019. Besides office real estate, the retail sector helped NCR gain traction from both foreign and domestic funds.”
Based on the high demand for organized retail spaces across the country, the retail segment also garnered considerable attention from private equity. Residential saw some green shoots of revival in 2019 and this will continue in 2020 as the Government’s distress funds are deployed.
“In sharp contrast to previous years, investors are now showing a keen interest in last-mile funding for stuck/delayed residential projects. This, along with government support of Rs 25,000 crore for stressed projects, will go a long way in relieving residential real estate from its woes,” he said.