PE In­vest­ment Trends in In­dia’s Realty Sec­tor: CBRE


Accommodation Times - - Real Estate Investments -

Trans­ac­tions in In­dia’s real es­tate space might have slowed down over the last two quar­ters, but the sec­tor has not been overwhelmed by the state of the wider econ­omy. De­spite the sub­dued pre-elec­tion eco­nomic sce­nario, in fact, the pe­riod ob­served an in­crease in pri­vate eq­uity ac­tiv­ity. Most in­vest­ments by PE groups were struc­tured debt deals and their pref­er­ence was for res­i­den­tial projects or well-leased commercial projects. In­vestors spotted op­por­tu­nity in fully leased IT parks and SEZs in cities such as Ban­ga­lore, Pune and Gur­gaon. Land and/or de­vel­op­ment sites for res­i­den­tial and mixed-use de­vel­op­ment in the pe­riph­eral lo­ca­tions of leading cities also at­tracted in­vestor at­ten­tion. Black­stone was among the most ac­tive PE play­ers in the coun­try in 2013; and other sig­nif­i­cant play­ers in­cluded the Xan­der Group and Red Fort Cap­i­tal.

One of the most sig­nif­i­cant deals last year saw Black­stone in­vest­ing ap­prox­i­mately Rs. 450 crore for a 50% stake in Panchshil Realty’s SEZ project, Eon Free Zone (leased as­set) at Kharadi, Pune. Last year also saw IDFC’s real es­tate in­vest­ments arm buy­ing out a con­structed and leased phase (Phase I) of Pune-based de­vel­oper, Paran­jape Schemes’ SEZ at Hin­je­w­adi, Pune, for INR 460 crore. More re­cently, Xan­der hiked its hold­ing in the Tata Group’s pub­lic listed re­tail com­pany, Trent Ltd., and ac­quired an additional 3% stake for about Rs. 107.4 crore. Mean­while, the Canada Pen­sion Plan In­vest­ment Board ( CPPIB) has also an­nounced its in­ten­tions to in­vest in the In­dian mar­ket; and Pi­ra­mal En­ter­prises Ltd. has formed a strate­gic al­liance with CPPIB for pro­vid­ing project-level debt to lo­cal de­vel­op­ers across the Delhi NCR, Mum­bai, Ban­ga­lore, Pune and Chen­nai mar­kets.

Ac­cord­ing to CBRE’s re­cently re­leased Asia Pa­cific In­vestor In­ten­tions Sur­vey 2014, which gauges the ap­petite and out­look of Asia Pa­cific real es­tate in­vestors for the rest of the year, a sig­nif­i­cant ma­jor­ity of in­vestors ex­pect to com­mit more cap­i­tal into the Asia Pa­cific real es­tate mar­ket in 2014 over that in 2013. The Sur­vey 2014 iden­ti­fies In­dia as one of the pri­or­ity mar­kets for global real es­tate in­vestors, par­tic­u­larly among Asian in­vestors. In­dia ranked as the fifth-most at­trac­tive in­vest­ment des­ti­na­tion in the APAC re­gion, be­hind China, Aus­tralia and Ja­pan, with long- term growth fac­tors such as the de­mo­graphic div­i­dend, and ris­ing mid­dle class shield­ing it from the on­go­ing vo­latil­ity in fi­nan­cial mar­kets. The in­ten­tion toin­vest in In­dia, there­fore, ex­ists; but ac­tual de­ploy­ment of cap­i­tal has un­for­tu­nately lagged be­hind (ac­cord­ing to the Sur­vey 2014).

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