Private Equity In Office Space Recorded At Inr 56 Bn Q1 2017: Cushman & Wakefield

According to international property consultants Cushman & Wakefield, office assets emerged as the most preferred segment for investments in first quarter (Jan – Mar 2017) for private equity investments in real estate (PERE).  This asset class recorded investments to the tune of INR 56.3 bn, which constituted 59% of the total investments made during the period. This has been the highest PERE inflow in office assets since 2009. During the quarter, the segment also noted an increased inflow by 90% year – on – year in Q1 2016 with an average deal size of INR 9.4 bn. Residential assets claimed 37% of total investments at INR 36.2 bn during Q1 2017, recording an increase of 59% same time last year with an average deal size of INR 1.8 bn.

Private Equity Investments in Real Estate (PERE) in Q1 2017

ANNOUNCED PE DEALS: CITY-WISE – VOLUME – (INR bn)
Period	Mumbai	Delhi-NCR	Bengaluru Advertisement	Pune	Chennai	Hyderabad
Q1 2017	47	12 Advertisement	13	2	3	4
Q1 2016	41 Advertisement	37	2	0.6	8	7 Advertisement
Q1 2015	5	10	9	3	5 Advertisement	0
Q1 2014	21	6	20	6 Advertisement	0	0
Q1 2013	5	0.8	1 Advertisement	7	2	0
Q1 2012	33	7 Advertisement	6	0.4	0	2

Source: Cushman & Wakefield Research, Real Capital Analytics

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Anshul Jain, Managing Director, India, Cushman & Wakefield, “Office assets receiving a record investment inflow speaks indicates to of investors’ confidence in this asset class. The office space is expected to continue to see more interest from the investors in the coming years. By the end of the year, we are expected to see atleast 2 -3 large portfolio level deals that would be further pushing the total PERE in office market. These can be seen as signs of maturity of the market and a commitment from the funds for a long term partnership with developers.”

Anshul further said, “Investment market in India has been going through some challenges that of appropriate properties for investment. In the recent times, when investors have been cautious about the long term promise of the properties, there will be a dirt of good products in the next few quarters owing to fewer upcoming properties in key markets. While expected office supply is on a slowdown mode, residential projects too seem to have gone back to drawing boards reducing the supply in the coming year. This said, PERE is expected to remain positive in outlook for 2017 especially in anticipation of the first REITs listing which is expected to happen this year.

Private Equity Investments in Real Estate (PERE) in Q1 2017

ANNOUNCED PE DEALS: CITY-WISE – VOLUME – (INR bn)
Period	Mumbai	Delhi-NCR	Bengaluru Advertisement	Pune	Chennai	Hyderabad
Q1 2017	47	12 Advertisement	13	2	3	4
Q1 2016	41 Advertisement	37	2	0.6	8	7 Advertisement
Q1 2015	5	10	9	3	5 Advertisement	0
Q1 2014	21	6	20	6 Advertisement	0	0
Q1 2013	5	0.8	1 Advertisement	7	2	0
Q1 2012	33	7 Advertisement	6	0.4	0	2

Source: Cushman & Wakefield Research, Real Capital Analytics

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Anshul Jain, Managing Director, India, Cushman & Wakefield, “Office assets receiving a record investment inflow speaks indicates to of investors’ confidence in this asset class. The office space is expected to continue to see more interest from the investors in the coming years. By the end of the year, we are expected to see atleast 2 -3 large portfolio level deals that would be further pushing the total PERE in office market. These can be seen as signs of maturity of the market and a commitment from the funds for a long term partnership with developers.”

Anshul further said,“ Investment market in India has been going through some challenges that of appropriate properties for investment. In the recent times, when investors have been cautious about the long term promise of the properties, there will be a dirt of good products in the next few quarters owing to fewer upcoming properties in key markets. While expected office supply is on a slowdown mode, residential projects too seem to have gone back to drawing boards reducing the supply in the coming year. This said, PERE is expected to remain positive in outlook for 2017 especially in anticipation of the first REITs listing which is expected to happen this year.

 Private Equity Investments in Real Estate (PERE) in Q1 2017

ANNOUNCED PE DEALS: CITY-WISE – VOLUME – (INR bn)
Period	Mumbai	Delhi-NCR Advertisement	Bengaluru	Pune	Chennai	Hyderabad
Q1 2017	47 Advertisement	12	13	2	3	4 Advertisement
Q1 2016	41	37	2	0.6	8 Advertisement	7
Q1 2015	5	10	9	3 Advertisement	5	0
Q1 2014	21	6	20 Advertisement	6	0	0
Q1 2013	5	0.8 Advertisement	1	7	2	0
Q1 2012	33 Advertisement	7	6	0.4	0	2 Advertisement

Source: Cushman & Wakefield Research, Real Capital Analytics

Anshul Jain, Managing Director, India, Cushman & Wakefield, “Office assets receiving a record investment inflow speaks indicates to of investors’ confidence in this asset class. The office space is expected to continue to see more interest from the investors in the coming years. By the end of the year, we are expected to see atleast 2 -3 large portfolio level deals that would be further pushing the total PERE in office market. These can be seen as signs of maturity of the market and a commitment from the funds for a long term partnership with developers.”

Anshul further said, “Investment market in India has been going through some challenges that of appropriate properties for investment. In the recent times, when investors have been cautious about the long term promise of the properties, there will be a dirt of good products in the next few quarters owing to fewer upcoming properties in key markets. While expected office supply is on a slowdown mode, residential projects too seem to have gone back to drawing boards reducing the supply in the coming year. This said, PERE is expected to remain positive in outlook for 2017 especially in anticipation of the first REITs listing which is expected to happen this year.

 See Annexure I for more details on PERE deals

ANNEXURE I 

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SECTOR WISE BREAK UP) and the implication of this more clearly, this is a very important factor in the way the market will moveSource: Cushman & Wakefield Research, Real Capital Analytics

 TOP PERE DEALS in Q1 2017

RETAIL SECTOR
TARGET COMPANY	ACQUIRER	CITY	PERIOD	VALUE (INR bn)
Centre One Mall	BlackSoil Realty Fund	Mumbai	Q1 2017 Advertisement	0.15

Source: Cushman & Wakefield Research, Real Capital Analytics 

RESIDENTIAL SECTOR
TARGET COMPANY	ACQUIRER	CITY	PERIOD	VALUE (INRbn)
Adarsh Developers	HDFC Realty Fund	Bengaluru	Q1 2017 Advertisement	3.5
Parinee Developers	Edelweiss Capital	Mumbai	Q1 2017	3.5
Runwal Group	KKR	Mumbai	Q1 2017	3.2 Advertisement

Source: Cushman & Wakefield Research, Real Capital Analytics 

OFFICE SECTOR
TARGET COMPANY	ACQUIRER	CITY	PERIOD	VALUE (INR bn)
Essar Group	RMZ Corp, QIA	Mumbai	Q1 2017	23.1 Advertisement
K Raheja Corp.	Blackstone	Multiple cities	Q1 2017	16.4
FIFC	Blackstone	Mumbai	Q1 2017	10.0

Source: Cushman & Wakefield Research, Real Capital Analytics

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