PE funds bullish on real estate

Private equity ( PE) is bullish on the Indian real estate. PE investment in real estate sector jumped over two- fold to ` 4,100 crore in the first six months of 2014 and is likely to cross ` 12,000 crore by end of the year, according to a report by Cushman and Wakefield.

It said that the second half of the year is expected to be around ` 7,900 crores.

“With a few large investments expected in the commercial office sector in H2 2014, we expect overall private equity investments during H2 to be more than double of H1 2014 levels,” said the report.

The total investment in first half of 2014 was more than double the investment levels in the first half of 2013 (` 1,650 crores). This is also the highest levels of investments during the first half of the year since H1 2009 (` 4,950 crores or $ 1 billion).

The total number of deals in the first half of 2014 increased substantially to 28 compared to 13 in the first half of 2013. Even the average deal size increased by 16 per cent to ` 146 crores.

The total value of investments in the construction development ( residential segment) for the first half of 2014 was recorded at ` 2,357 crores, constituting nearly 60 per cent of the overall investments.

“In the residential asset class, private equity funds are now being viewed favourably by developers as PE money is being used for de- risking projects and as strategic long term partnerships for further expansion and development,"” said the report.

The total value of investments in the purchase of leased office assets for the first half of 2014 was recorded at ` 1,435 crores.

“Clarity in the governance process and the advent of a stable government will be critical to the stability of the investment market,” said Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield.