Private equity investors still bullish on Indian real estate - report
Despite slow sales and increasing inventories, private equity investors remained optimistic on the real estate sector in India. Citing a report by realty consultant Cushman & Wakefield, The Economic Times reported that in the nine months that ended September, private equity deals in the real estate segment in India increased 26% to Rs 4,700 crore year-on-year.
The report said the increase was attributed to the increase in investments in leased office properties that were income-generating. These investments came from Blackstone Group and other institutional investors. The report also revealed that from January to September this year, total investments in office space also increased Rs 2,476 crore or USD 397 million. This represented more than twice the investments generated in the same nine months from 2011 to 2012.
Cushman & Wakefield South Asia Executive Managing Director Sanjay Dutt told The Economic Times, "There is a clear preference for investments in leased office spaces with over Rs 7,667 crore invested in the segment since 2011." He also forecasted that there will be more transactions in the commercial sector in the future.
Duff added, "With improving sentiments, deal momentum in the realty sector is expected to increase in the coming year. REITs (real estate investment trusts) seem to be a possibility soon and that has propped optimism among developers and even funds that will be able to offload some of their assets and get exits. This availability of exit mechanism is expected to boost investment activity in commercial realty."
The report said more funds were attracted to these deal and are thinking of purchasing by themselves or forging a partnership to be able to do so. Last week, Canada Pension Plan Investment Board or CPPIB announced that it has formed a USD 200 million partnership with Shapoorji Pallonji Group. The report said they were looking at opportunities in the Indian real estate sector.