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First quarter investments in Indian Realty at decade-high of $2.5 billion
The Economic Times  |  May 2, 2019

Kailash Babar Mumbai

Investors have pumped in a record $2.5 billion or Rs 17,600 crore in the first quarter of 2019, reposing their confidence in India’s real estate sector. The investment has not only more than doubled on a sequential basis, it has also been the highest among first-quarter inflows since over a decade, showed data from Cushman & Wakefield.

 

Investor-friendly reforms, positive sentiment following India’s first Real Estate Investment Trust (REIT) offering, and firm market fundamentals have helped this upward trajectory, beating the first quarter investment volumes of all years since 2008.

 

“Higher participation of foreign investors this quarter is a signal towards sustained interest in the country’s real estate story backed by increasing transparency and friendly investment policies. There are bright opportunities in the warehousing and logistics segment with office and retail sectors showing continued traction,” said Anshul Jain, country head & managing director, Cushman & Wakefield India.

 

According to Jain, the first successful REIT listing has opened an additional avenue for investors to participate in the momentum visible in office markets while also reinforcing the attractiveness of Indian realty. The much awaited and the first REIT listing, during the quarter, by Blackstone-backed Embassy Office Parks to raise Rs 4,750 crore was well received with an over-subion of 2.57 times.

 

The success of the REIT, based on promised and generated returns, paves the way for more such listings from institutional investors who have been in the process of building up a portfolio of rent-yielding assets in the past few years.

 

Foreign investors continued to retain an upbeat sentiment for investing into Indian real estate, holding a significant 64% share in the quarterly investment volume. Further, partnerships and platforms set up by foreign investors and Indian counterparts constituted an additional 19% of the total private equity investments during the quarter.

 

Majority of the investments made by the foreign investors on their own and at the platform level were targeted at the office segment, which garnered a 54% share, followed by the hospitality segment accounting for a share of 27%.

 

Mumbai led the investment activity among all cities during the period with a 30.5% share in the overall investments, followed by Bengaluru with 27.3% share.

 

Private equity majors Blackstone & Brookfield Asset Management as well as Abu Dhabi Investment Authority were among the key institutional investors during the quarter.

 

Residential segment accounted for 20.9% of the overall private equity inflows at Rs 3,697 crore during the quarter.

 

Office segment accounted for 44.8% of the total investments during the period, with $1.14 billion or Rs 7,925 crore. This was a 30% increase from a year ago, signalling the persistent investment appetite for quality office assets in the country.

 

Hospitality investments have more than trebled in the previous four-year period since 2015, compared with the four-year period prior to that, signifying investor interest for the right opportunities around operational and distressed assets.