Real Estate: Indian Real Estate 2019-Big Deals Largely Concluded by Foreign PE Investors

January 15, 2020 | Real Estate, Special Reports
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Foreign private equity invested US$5.03 billion in Indian real estate in 2019.

Compared to 2018, when foreign PE investors poured in US$ 5.13 billion into Indian real estate, investment fell by 2% in 2019.

However, the investment in 2019 was nearly 80% higher than the US$ 2.8 billion brought in during 2015, says a report by Anarock Capital.

Indian real estate: Top pick is commercial

Foreign PE investors clearly have a growing preference for commercial property. The share of commercial property in the total annual PE investment more than doubled from 32% in 2015 to 66% in 2019. However, compared to 2018, the share of commercial property fell by 8%.

Foreign PE investments: Favored territories in India

There was a marked preference for the NCR region (+333% in 2019 over 2018) and Pune (+213%). However, Hyderabad (-61%) and Chennai (-45%) lost some momentum during 2019. On the other hand, Kolkata remained flat.

Real estate sector trends

Sector-wise trends compared in 2019 and 2018 as follows:

Sector 2019 % share in total PE 2018 % share in total PE
Commercial 66 74
Retail 19 7
Residential 8 5
Logistics & Warehousing 4 8
Multiple asset classes 3 6

Domestic versus foreign investing

The foreign component in private equity investments in Indian real estate was 55% and 66% respectively, in 2019 and 2018.

Compared to this, domestic investment was 8% and 25%, respectively.

However, interestingly, joint (foreign+local) investments grew sharply from 6% in 2018 to 37% in 2019.

Indian real estate: Outlook for 2020

The sharp bump up seen in retail property investments in 2019 is likely to continue in 2020. Further, Government efforts to remove the logjam in stalled residential projects through a distressed fund may bear fruit – 2020 to see many last-mile funding deals in residential.

Spurred by the success of India’s first REIT, there may be many more such launches. Anarock expects over US$25 billion of new REITs over the next three years.

(This is Part II of the two-part article on Indian real estate based on the Anarock report)

Related Story:   PwC: Takeaways from the Real Estate 2020 Outlook 

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