The private equity investments in the country’s real estate during 2013 was up at Rs 7,000 crore ($1.2 billion), registering an increase of 13 per cent over 2012 (Rs 6,200 crore/ $ 1.1 billion), according to a report by global real estate consultancy Cushman & Wakefield.
The overall private equity investments across sectors in India have also increased by 11 per cent from $9.49 billion in 2012 to $10.5 billion in 2013.
In its report, the consultancy states, the increase in private equity inflows was primarily due to rising investments in residential assets and other sectors like retail and hospitality. While the number of deals has increased to 40 in 2013 compared to 34 in 2012, the average deal size has declined marginally and was approximately Rs 175 crore.
Given the difficult economic conditions, developers are finding it increasingly difficult to raise capital through traditional sources and are opting for alternative sources, the report states.
Sanjay Dutt, Executive Managing Director South Asia, Cushman & Wakefield, in a statement said, “A number of large global investors, including a number of sovereign funds, have taken the first move by partnering with successful local investors and developers for investing in the Indian real estate market. This is expected to result in high transaction activity especially in income yielding commercial office assets during 2014.”
The total foreign direct investment (FDI) inflow in Construction Development for the third quarter of 2013 was Rs 3,200 crore, which is the highest quarterly investment since Q3 2009. FDI inflow for the first three quarters of 2013 in Construction Development was Rs 5,500 crore, a 25 per cent increase from the same period in 2012.
Bangalore continued to witness the highest level of transaction activity in 2013 with overall investments of approximately Rs 2,200 crore, though it declined by 33 per cent from 2012. Both Pune and NCR witnessed an increase in transaction volume in 2013. Mumbai witnessed a decline of approximately 15 per cent in investments for 2013 to Rs 1,100 crore. However, investment activity in the city is expected to increase with a few large deals in office assets being currently in the pipeline.