PE investments set to cross $4 bn

Private equity investments into India’s real estate market is expected to cross $4 billion this year, the highest since 2010, on the back of the government’s regulatory reforms in the last two years, said a report by property consultant firm Knight Frank India.

Investments from PE funds had almost stagnated between 2011 and 2014. However, there been renewed interest following the Narendra Modi government assuming office in 2014 and the subsequent roll out of a battery of reforms, said the report.

The recent stake sale by Gurugram-based real estate firm DLF Ltd’s promoters to an affiliate of Singapore’s sovereign wealth fund GIC Pte Ltd for around ₹13,000 crore accounted for 56.4% of total investments, according to the report.

Indian real estate sector saw an average investment of $2.1 billion between 2011 and 2014 from private equity investors. It rose by 57% to $3.3 billion between 2015 and mid-September. Though the number of deals dwindled to 13 in 2017, the average investments per deal increased 10-fold to $246 million, the report said. “The dominance of institutional funds in the private equity investments’ pie reflects long-term confidence in India’s strong economic fundamentals. In line with the change in the investors’ profile we have observed a dramatic shift in caphas ital movement from the residential sector to pre-leased office and retail assets,” said Samantak Das, chief economist and national director (research) Knight Frank India.

As per the report, share of private equity investments into residential projects nearly halved from 50% in 2011 to 28% in 2016 and further dropped to a meagre 4% in 2017.

Currently, office market accounts around 66% of the total private equity investments as against 29% in 2011.