Monday, 12 August 2013

Reviews on Falling Private Equity investments in Indian Real Estate

Private equity (PE) investments in Indian real estate fell 46% to about $276 million (Rs.1,638 crore) in the first half of 2013 from a year earlier, but funds worth $2 billion are still available to be deployed in the sector, property consultant Cushman and Wakefield said in a report.

The decline in investments was due to a drop in the number of deals struck during the six months—13 against 19 in the first half of last year—as the average ticket size has remained at $40-50 million, said the report. It blamed the decline in transactions on the slowing economy and the steep depreciation in the rupee, among other factors.

“Despite a slowdown in the construction market and reduced number of investible projects in India, real estate features as the fourth-most invested sector by private equity funds in the latest report,” said Sanjay Dutt, executive managing director South Asia, Cushman and Wakefield. “It has traditionally been one of the most preferred investment categories on account of buoyant demand for real estate.”

He estimated that about $2 billion is ready to be deployed in the Indian real estate sector.
“Investors are willing to invest in real estate; however they are exploring the market for right real estate projects,” Dutt said. “We anticipate that in the next few quarters, after some regulatory and politico-economic environment are regularized, the momentum in real estate will pick up throwing open more investable options for the investors.”

The total value of investments in the residential segment fell 48% to $156 million in the first half of 2013, and by 37% to $118.1 million in the office segment, the report said.
So far in 2013, the highest value PE investment was $131.6 million in Pune, followed by $67.5 million in Mumbai, $38.8 million in the National Capital Region, and $16.9 million in Bangalore.


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