Private equity firms are eager to invest approximately $2 billion (Rs 11,854 crore) in the real estate market despite a drop in private equity investments in the first half of 2013, according to a new report.
While PE investments in real estate was recorded at Rs 1,638 crore in H1 2013, which is 46 per cent lower compared to the first half of 2012 with its Rs 3,050 crore investments, PE funds have continued to show a keen interest in the market. A number of deals are in discussion, according to global real estate consultancy firm Cushman & Wakefield.
The firm has said the decline in the quantum of PE investment was essentially due to fewer deals, around 13 in H1 2013, though the average ticket size of deals remained the same.
In 2013, the firm has said the highest value of PE investments was recorded in Pune at Rs 780 crore, followed by Mumbai at Rs 400 crore, NCR at Rs 235 crore and Bangalore at Rs 100 crore. Pune witnessed high-value transactions such as the Panchshil Realty and Ireo Management SEZ by Blackstone for Rs 450 crore.
The first quarter of 2013 saw PE deals worth Rs 700 crore announced in Pune, Rs 270 crore in Mumbai, Rs 100 crore in Bangalore and Rs 75 crore in the NCR region.
The report adds that the pace of growth of the real estate sector in India has been impacted given the current prevailing volatility in the market, including slower growth of the Indian economy and the depreciation of the rupee.
Sanjay Dutt, Executive Managing Director South Asia, Cushman & Wakefield, said that despite the slowdown in the construction market and reduced number of investible projects in India, real estate features as the fourth most invested sector by PE funds.
With approximately $2 billion ready to be deployed in the real estate sector across India, Dutt added that the fund raising environment, both the domestic and offshore, has consistently improved with more quality capital available.
The report indicated that the total value of investments in the residential segment, recorded at Rs 90 crore, in H1 2013 witnessed a drop of 48 per cent over the last year. The total value of investments in the office segment was also lower in H1 2013 at Rs 700 crore.
However, the report adds that there is a strong growing trend towards investments in ready office space. The growing stability of the market is reflected by the continuous growth of the core investors, with over Rs 7,705 crore invested in ready office space during the last three years.