Private equity firms have invested over $4.2 billion into India’s realty market in the first half of 2019.
Original published by economictimes.indiatimes | Written by: Kailash Babar
The slew of reforms introduced in the Indian real estate sector over the past two-three years are helping the market move towards improved transparency and are therefore attracting more foreign institutional investors, said John Forrester, global president, Cushman and Wakefield.
“With RERA (Real Estate (Regulation and Development) Act, 2016), GST (Goods and Services Tax), insolvency & bankruptcy law, all of these reforms, the Indian economy is getting more sophisticated, and it's an easier place to do business. With the added sophistication and the added ease of doing business, all of a sudden risk return moves into India’s favour,” he told ET in an exclusive interaction while referring to India’s attractiveness in realty sector from global investors’ perspective.
Driven by the investment appetite for commercial properties, private equity inflow into Indian real estate sector has been strengthening further mainly on account of foreign funds’ direct exposure and platform alliances. Private equity firms have invested over $4.2 billion into India’s realty market in the first half of 2019, up 10% from a year ago.
“We see an abundance of opportunity in the domestic market here in India. There are a lot of demographic and economic tailwinds for India that don't necessarily exist in other markets,” said Matthew Bouw, CEO – Asia-Pacific, Cushman and Wakefield, while highlighting India’s demographic factors.
While both Forrester and Bouw agreed that the residential segment of Indian real estate is going through a sluggish phase, affordable housing continues to perform better in the backdrop of the government’s objective of Housing for All by 2022. Given the issues of delayed deliveries and instances of rising consumer activism over the past few years, real estate developers’ business models are going through a change.
“The market is coming to terms with these changes.” Forrester said. “Your business models have changed because the capital infusions have become much more capital-heavy, while on the other hand, the regulation has completely changed the landscape.” Both of them reckon that India is standing among the top 10 key markets in the global scheme of things and the scenario has changed completely in favour of the country over the past few years.
“So, we focus on the top 50 or so markets in the world, I would say that we're probably looking at three or four of those now in India, whereas four or five years ago, maybe only one or two,” Bouw said.