By James Mathew
At $3bn, commercial real estate projects attracted the large chunk of PE funds in Jan-Sept 2019
Private Equity funds have pumped in close to $3.8 billion in Indian real estate projects between January and September this year, coming to the aid of the cash-starved sector which has been facing acute liquidity issues for the last several months.
This year’s PE fund flow is 19 percent higher than last year’s $3.2 billion investment during the corresponding period.
Commercial real estate projects attracted the large chunk of PE funds in the first 9 months of 2019, amounting to $3 billion, a sharp rise of 43 percent for the segment from $2.1 billion in the year ago period, according to the latest research report by Anarock Capital.
“The lion’s share of this year’s PE funding in Indian real estate sector – as high as 95 percent – came as equity funding,” said Shobhit Agarwal, managing director and CEO of Anarock Capital.
“Only 5 percent came as structured debt during January-September this year,” he added.
Blackstone’s $800 million investment in the commercial real estate project of Indiabulls Real Estate in Mumbai, Blackstone and Salarpuria Sattva’s combined investment of $400 million in Tanglin Retail Realty’s commercial project in Bengaluru and Xander’s $150 million investment in New Vernon Capital’s commercial project in Pune were among the big ticket PE deals that took place in India this year.
“Foreign PE funds continued to dominate the real estate investment scene this year as well,” Agarwal said, adding that Blackstone, Hines, Ascendas and Brookefield were the top ones.
Residential segment received only $295 million PE funding during January-September this year. This was, however, nearly 40 percent higher than last year same period’s $210 million.
Retail segment attracted close to $260 million PE investments since January till September 2019, whereas last year the segment saw higher inflows at $355 million.
Logistics & warehousing also witnessed 27 percent decline in total PE inflows in 2019, amounting to just about $200 million as against $275 million in the year ago period.
Mumbai attracted maximum PE funding in 2019, amounting to approximately $1.59 billion. This is followed by Benguluru ($420 million), Pune ($390 million) and Chennai (230 million).
The south Indian city of Hyderabad, which saw more than $790 million PE inflows in the first three quarters of 2018, saw a fall of 76 percent during the same period this year at $190 million. In 2018, the city attracted total funds worth $1.1 billion.