New research shows surge in private equity investments in Indian property sector
Private Equity (PE) players injected $580 million into Indian real estate in the month of June, with the commercial segment attracting a larger share, new research has revealed.
The surge in private equity investments in Indian realty sector came after a 31 percent decline in fund flow into the sector in the first half of 2019, according to the latest Anarock research report.
“The general elections predictably cast a shadow on funding into Indian real estate. A majority government at the Centre is gradually reviving private equity's confidence in Indian real estate, especially the commercial sector” the report said, analysing the latest trend.
Commercial real estate attracted about 64 percent of the total fund inflow, amounting to over $1.4 billion in the first half of this year.
This is followed by the residential real estate receiving $270 million, retail real estate attracting $260 million and logistics & warehousing attracting nearly $200 million, the report said.
Mumbai attracted the maximum share of the of the overall inflows into the sector at 34 percent, amounting to $530 million in the first half 2019, followed by Pune with $250 million.?
The total fund inflows into the real estate sector saw a yearly decline of 31 percent in H1 – from $3.2 billion in H1 2018 to nearly $2.2 billion in H1.
Also, the IL&FS default last year and RBI's tightening norms for NBFC and HFC lending to real estate had a severe impact for the sector, the report said.
Of the total funding into the sector in H1, private equity inflows accounted for over $2.1 billion, while $140 million came in from non-banking financial companies (NBFCs) and housing finance companies (HFCs).
In H1 2018, PE funding stood at approximately $2.6 billion. Funding from NBFCs/HFCs saw a 73 percent decline - from $520 million in January-June 2018 to $140 million in the same perod of this year.
The report said of the total $2.2 billion funding in H1, over 89 percent was equity funding and only 11 percent was debt.
In H1 2018, equity funding had a 83 percent share, while debt amounted to 17 percent.