The private equity investments in real estate reached $2.8 billion or Rs 18,300 crore during the first nine months (January - September) of CY 2015, the highest since 2008.
The private equity investments in real estate reached $2.8 billion or Rs 18,300 crore during the first nine months (January - September) of CY 2015, the highest since 2008.
This is an increase of 84 per cent over the corresponding period last year signifying the growing confidence of the private equity investor in the real estate sector of India. According to Cushman & Wakefield (C&W), a global property consultant, the total number of deals in the same period was recorded at 61 as against 52 in the corresponding period last year.
Moreover, the average deal size also increased during the first three quarters of 2015 – Rs 300 crore as against an average deal size of Rs190 crore during the same time last year.
Foreign funds led the investment activity with a total investment of Rs10,740 crore or $1.7 billion accounting for almost 59 per cent share in the total investment volume in 2015 till date followed by domestic funds which had about 41 per cent share with a net investment of Rs 7,560 crore or $1.2 billion. The majority of the foreign investment was from funds based out of the Asia-Pacific region (excluding India) followed by North America.
According to C&W, nearly two-third of total private equity investment in real estate made during the first three quarters of 2015 were at special purpose vehicle (SPV) level and that too through structured debt/mezzanine route.
Pure equity or entity level deals which were favourites among the private equity funds during the 2006-08, almost dried up in 2012.
However, post the formation of a stable, growth-oriented government in India, investor confidence has renewed and private equity funds and financial institutions have started making investments at the entity level. As a result, nearly 22 per cent of the total investments volume committed in 2015 was at the entity level.
Delhi-NCR and Mumbai remained the top two contributors in attracting PE investments during the first nine months of 2015. Mumbai attracted the highest PE investment volume, with over 40 per cent (Rs 7,390 crore) share in total PE investment volume followed by Delhi-NCR, which garnered 24 per cent share (Rs 4,450 crore).
