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PE into Indian real estate in 2016 vastly exceeded the 2015 inflows

Shobhit Agarwal

                                      Debt and equity investments together increased by 62% (y-o-y); stood at INR 38,000 Cr in 2016

Shobhit Agarwal, Managing Director– Capital Markets & International Director, JLL India

In 2016, equity investment was seen on a return journey to India. After the change in its regulatory framework, the country is now looking way more attractive to investors – both foreign and domestic – than ever before. Thanks to an improvement in India’s rankings on different indices and a pro-active government keen on improving these further, the country is bound to attract more equity investment.

In 2016, the private equity inflows into Indian real estate showed a 62% increase (y-o-y). The total inflows last year stood at INR 38,000 crore compared to the 2015 figure of INR 23,500 crore. Out of the entire sum, INR 13,500 crore was investment via pure equity while the rest was via different structures of debt. Even in terms of pure equity, 2016 saw an impressive increase of 29% (y-o-y).

Total PE Inflow

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Sum of Investment (INR cr)

2015

23,500

2016

38,000

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PE Inflow (Equity)

Sum of Investment (INR cr)

2015

10,500

2016

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13,500

PE Inflow in 2ndHalf

Sum of Investment (INR cr)

2H 2015

9,500

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2H 2016

21,000

Interestingly, when only the 2H of 2016 is compared to the 2H of 2015, there has been a 121% increase in the former over the latter. This was due to increased confidence shown by investors post the Parliament’s passage of RERA [Real Estate (Regulation & Development) Bill] and GST.

Though the historic high of 2007 (in terms of total PE inflows) was not breached, last year proved to be the second-best year so far. This year may even turn out to be slightly better than 2016 – despite BREXIT and the outcome of US presidential elections – thanks to a strengthening and modernising economy and India’s growing reputation as an attractive investment destination.

Economic and political stability, liberalisation of the FDI policy by the Modi government and the resultant improvement in the investor community’s sentiment are some of the factors working in Indian real estate’s favour. All eyes on 2017!

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