Approximately $14 billion of foreign private equity has flown into Indian real estate sector since 2015 until the third quarter of 2019. As per a recent report, the period between 2015 and third quarter of 2019 saw considerable foreign private equity investment out of which major chunk has gone into commercial real estate segment.
While about $8.8 billion (about 63 percent of total investment) went into commercial realty sector, $1.7 billion has gone into retail sector while another $1.5 billion went into housing sector. The logistics and warehousing drew over $1 billion while remaining funds went into mixed-use developments.
An additional infusion between the said period was of $1.6 billion which was a mix of foreign private equity and funding by Indian developers or investors who collaborated either at project or entity levels, says data from a recent ANAROCK report.
While Indian housing sector has been plagued by issues like delayed/stalled units, low sales and fairly lower yields, the commercial real estate segment has delivered a comparatively stellar performance in the last five years. Steady demand and rising rentals gave foreign investors a decisive edge.
Going forward too, the Indian commercial real estate is expected to continue to attract more and more PE funds as there is high demand for Grade A office spaces across the top Indian cities. Along with commercial segment, retail and warehousing segment too will continue to witness considerable growth.
On the other hand, the sector, that has greatest need of liquidity infusion, will continue to linger in the background with very less of funds coming its way. Although the news of government’s Alternative Investment Fund (AIF) worth Rs. 25, 000 crore has brought cheers in the segment, the foreign investors will expectedly adapt a wait and watch approach before investing in this ailing segment.
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