Private equity pumped in US$2.1bn in H1’19
A majority government at the Centre is gradually reviving private equity’s confidence in Indian real estate – especially the commercial sector.
ANAROCK research indicates that PE players infused US$580 million into Indian real estate in the month of June, immediately after Prime Minister Narendra Modi was re-elected.
That said, the general elections predictably cast a shadow on funding into Indian real estate, writes Shobhit Agarwal, MD & CEO – ANAROCK Capital.
The total inflows into the real estate sector saw a yearly decline of 31% in H1 2019 – from US$3.2 billion in H1 2018 to nearly US$2.2 billion in H1 2019.
Also, the IL&FS default last year and RBI’s tightening norms for NBFC and HFC lending to real estate had a severe impact, to say the least.
Of the total funding into the sector in H1 2019:
Private equity inflows accounted for over US$2.1 billion, while US$140 million came in from NBFCs/HFCs;
In H1 2018, PE funding stood at approx. US$2.6 billion and funding from NBFCs/HFCs saw a 73% decline – from US$520 million in H1 2018 to US$140 million in H1 2019;
Of the total US$2.2 billion funding in H1 2019, over 89% was equity funding; only 11% was debt. In H1 2018, equity funding had a 83% share while debt stood at 17%.
Mumbai attracted the maximum (24%) of the overall inflows into the sector amounting to US$530 million. Pune followed with nearly US$250 million coming in from institutional investors – an increase of 97% for Mumbai’s immediate neighbour since H1 2018.
H1 2019 Funding – Sector-wise Breakup
Commercial real estate attracted the lion’s share of investments with 64% amounting to over US$1.4 billion;
Residential real estate attracted over US$270 million;
Retail real estate attracted US$260 million;
Logistics & warehousing attracted nearly US$200 million.
Even while caution prevails over the current market dynamics, the incumbent’s government proactive initiatives across sectors will doubtlessly cause more private equity inflows into the real estate sector.
While Indian commercial real estate’s overall attractiveness for institutional funds is now well-established, the residential sector is also likely to become increasingly interesting in the back of the government’s determined push to affordable housing. fiinews.com
