Rs 12k cr PE investment ready for real estate

Global real estate consultancy firm Cushman & Wakefield’s has revealed that approximately Rs 11,854 crore ($2 billion) is available with private equity (PE) firms ready to be deployed in real estate, despite a drop in the PE investment in the first half of 2013.

“While the PE investments in real estate was recorded at Rs1,638 crore ($276 million) in H1 2013, which is 46 per cent lower when compared to first half of  2012 Rs 3,050 crore ($514 million), the PE funds continue to show  keen interest in the market with a number of deals in discussion”, according to the report on PE investment by Cushman & Wakefield.

In a reaction to the current prevailing volatility in the market, including slower growth of the Indian economy, political stalemates and depreciation of the rupee, the pace of growth of the real estate industry in India has been impacted. “While, there is a strong investment sentiment for private equity real estate (PERE) transactions in India however they display a reflection of the market sentiments, where funds are looking at only embarking on projects with strong fundamentals,” the report said.

Commenting on the report, Sanjay Dutt, executive managing director South Asia, Cushman & Wakefield said, “It is noteworthy that despite a slowdown in the construction market and reduced number of investible projects in India, real estate features as the fourth most invested sector by PE funds in the latest report. It has traditionally been one of the most preferred investment categories on account of buoyant demand for real estate.”

Sanjay further said approximately Rs 11,854 crore ($2 billion) is ready to be deployed in the real estate sector of the Indian market. The fund raising environment (domestic and offshore) has consistently improved with more quality capital available for the sponsors with demonstrated track record. “Investors are willing to invest in real estate; however, they are exploring the market for right real estate projects. We anticipate that in the next few quarters, after some regulatory and politico-economic environment are regularized, the momentum in real estate will pick up throwing open more investible options for the investors,” he added.

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The total value of investments in the residential segment recorded at Rs 9.3 billion ($156 million) in H1 2013 witnessed a drop of 48 per cent over last year. The total value of investments in the office segment was also lower in H1 2013 at $118.1 million. However, there is a strong growing trend towards investments in ready office space. The growing stability of the market is reflected by the continuous growth of the core investors (number and value) with over Rs 7,705 crore ($1.3 billion) invested in ready office space during the last three years.

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