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Real Estate Attracts $3.8 Bn Private Equity from Jan-Sept 2019; Nearly 19% Yearly Rise

Real-estate-draws
    • Private equity investments were over USD 3.2 bn in corresponding period of 2018
    • Commercial sector comprised 79% overall share; attracts close to USD 3 bn funds
    • Residential attracts USD 295 mn during Jan. – Sept. 2019 against USD 210 mn a year ago
    • Retail and logistics & warehousing see total inflows of approx. USD 260 mn & USD 200 mn in 2019 respectively
    • MMR sees maximum inflows at USD 1.59 bn this year; records yearly increase of 3%
    • Pune sees more than 200% yearly rise in investments – from USD 125 mn in 2018 to nearly USD 390 mn in 2019
    • Hyderabad witnessed 76% yearly decline – from over USD 790 mn in 2018 to just USD 190 mn this year
    • Of total USD 3.8 bn funds in 2019, equity funding comprises 95% share
    • Indian real estate in Q3 2019 alone sees total PE inflows of nearly USD 1.7 bn

Giving a flicker of hope to cash-starved Indian real estate, private equity funds have pumped in nearly USD 3.8 bn between January to September period in 2019, reveals recent research by ANAROCK. Recording nearly 19% yearly gain, total inflows equalled over USD 3.2 bn in the corresponding period a year ago.

As much as USD 3.6 bn was equity funding – comprising nearly 95% overall share – while the remaining 5% was via structured debt. Also, foreign private equity funds continued to dominate the real estate investment scene. Top investors included Blackstone, Hines, Ascendas, Brookefield etc.

Segment-wise break up

  • Commercial real estate continued to attract maximum PE investments, totalling close to USD 3 bn funds in the first three quarters of 2019. In the corresponding period of 2018, total inflows within this segment equalled nearly USD 2.1 bn, thus rising by 43% in a year.
  • Residential segment, on the other hand, received USD 295 mn funding this year as against USD 210 mn last year, thus seeing nearly 40% yearly gain.
  • Retail segment attracted close to USD 260 mn funds since January till September 2019 whereas last year it saw inflows of USD 355 mn, a reduction of 27% in a year.
  • Logistics & warehousing witnessed 27% decline in total PE inflows in 2019 and equalled nearly USD 200 mn as against USD 275 mn a year ago.

Cities on a roll

  • MMR attracted maximum PE funding in 2019, amounting to approx. USD 1.59 bn. On yearly basis, the region saw total inflows increase by 3% from USD 1.54 bn in first three quarters of 2018.
  • Pune, on the other hand, saw total investments of USD 390 mn between January till September period in 2019 against USD 125 mn in same period of 2018, a rise of nearly 213%.
  • The IT capital of India – Bangalore – also witnessed nearly 17% yearly gain – from USD 420 mn in 2018 period to nearly USD 490 mn in 2019.
  • Interestingly, Hyderabad, which saw more than USD 790 mn PE inflows in the first three quarters of 2018 saw overall PE funding decline by 76% to USD 190 mn in 2019. In entire 2018, the city attracted total funds worth USD 1.1 bn – more of a one-hit wonder.
  • Chennai saw investments of nearly USD 230 mn into real estate sector in 2019 against USD 160 mn a year ago – an increase of approx. 44%.
  • PE funding in NCR continued to squeeze further in 2019 with investors pumping in merely USD 115 mn in contrast to USD 150 mn in January to September period of 2018.
Top 3 Deals in Q3 2019
Investor Investee Location Asset Class Approx. Deal Amount (USD Mn.)
Blackstone Indiabulls Real Estate Mumbai Commercial 850
Blackstone & Salarpuria Sattva Tanglin Retail Realty Bengaluru Commercial 400
Xander New Vernon Capital Pune Commercial 150

Source: ANAROCK Capital

(Note: Deals rounded off to nearest 50)

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