India attracts $25 bn foreign PE investments so far 


Hyderabad: Indian realty sector has attracted over $25 billion worth of private equity investments from foreign investors since 2005. The nation witnessed momentum in investments from 2014 onwards, with the sector attracting $16.6 billion. In this period, investor focus remained largely on big-ticket income-yielding commercial and retail assets-72 per cent in aggregate. This period also saw the entry of significant Canadian pension funds into Indian real estate, either directly or through platform deals with Indian counterpart.

Since 2005, when restrictions on FDI in real estate were lifted, the India realty sector has received more than $25 billion worth of equity investments from foreign investors. While the pre-Modi era witnessed sizable foreign investments, a major portion of these came post 2014.

The period between 2005 and 2014 saw investments of $9 billion, while the past five years saw a remarkable 84 per cent increase – that too in half the number of years. Most post-2014 investments were in income-yielding assets- largely office, followed by retail projects, said Shobhit Agarwal, MD & CEO, Anarock Capital.

These investments came in from all over the world, but the investing regions hav2ot been constant over the years. Investment in Indian real estate started from Singapore-based funds, quickly followed by funds from the US and Europe. Between 2005 and 2008, Indian real estate received investments worth $5.7 billion.

Considerable activity here came from capital providers such as JP Morgan, Morgan Stanley, Goldman Sachs, Lehman brothers, Wachovia, Walton Street Capital, etc. and Singapore-based developer capital providers like Ascendas, Xander, Mapletree and Capitaland. However, post 2008, most funds withdrew from India because there were limited exit opportunities. In the ensuing six years, only $3.4 billion worth of investments came into Indian real estate, most of them in 2014.

In this period, Blackstone strengthened its position with multiple high-ticket investments across Tier 1 cities. Brookfield also headlined with $330 million investments in Unitech Corporate Parks (UCP). This period also saw considerable consolidation from Singapore-based funds like GIC, Ascendas and Xander. While Singapore-based funds led by GIC remained very active in this period, US-based funds led by Blackstone continued their love affair with India real estate and invested more than $5.7 billion in the same period.

“In 2020, we expect the funding focus to remain on Grade A income-generating assets along with last-mile funding opportunities in residential projects. A few Japanese investors / corporates have been evaluating Indian real estate investment options and we can expect them to get into gear in 2020, along with pension and insurance funds,” he added.

These funds are inherently patient and come with longer investment tenures. As such, they will play a significant role in providing the long-term solutions Indian developers now need.

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