Indian real estate has attracted $2.2 billion institutional funding during the first half of 2019, down 31% from a year ago, showed an ANAROCK Property Consultants.
originally published by Kailash Babar | ET Bureau | July 31, 2019, 16:45 IST
MUMBAI: A majority government at the centre is gradually reviving private equity's confidence in Indian real estate - especially the commercial sector, the general elections during the said period has predictably cast a shadow on funding into Indian real estate.
Indian real estate has attracted $2.2 billion institutional funding during the first half of 2019, down 31% from a year ago, showed an ANAROCK Property Consultants. Interestingly, private equity firms players infused $580 million into Indian real estate in June, immediately after the new government took charge.
The IL&FS default last year and the Reserve Bank of India’s tightening norms for non-banking finance companies (NBFC) and housing finance companies (HFC) lending to real estate also impacted the funding.
“Even while caution prevails over the current market dynamics, the incumbent's government proactive initiatives across sectors will doubtlessly cause more private equity inflows into the real estate sector,” said Shobhit Agarwal, MD & CEO - ANAROCK Capital.
According to Agarwal, Indian commercial real estate's overall attractiveness for institutional funds is now well-established, and the residential sector is also likely to become increasingly interesting in the back of the government's determined push to affordable housing.
While private equity inflows accounted for over $2.1 billion, nearly $140 million came in from NBFCs and HFCs. During the first half of 2018, private equity funding stood at around $2.6 billion and funding from NBFCs/HFCs saw a 73% decline - from $520 million in the first half of 2018.
Of the total $2.2 billion funding in the first half of 2019, over 89% was equity funding; only 11% was debt. In the first half of 2018, equity funding had a 83% share while debt stood at 17%.
Mumbai attracted the maximum 24% of the overall inflows into the sector amounting to $530 million. Pune followed with nearly $ 250 million coming in from institutional investors – an increase of 97% for Mumbai’s immediate neighbour since the first half of 2018.
Southern cities of Bengaluru, Chennai and Hyderabad collectively attracted over $610 million in the first half of 2019, while NCR saw minimal inflows.
Commercial real estate attracted the lion's share of investments with 64% amounting to over $1.4 billion, while residential real estate attracted over $270 million. Retail real estate attracted $260 million and logistics & warehousing attracted nearly $200 million.