Private equity inflows into real estate rose 15 percent year-on-year to Rs 165.3 billion (USD 2.6 billion) during the first quarter, eclipsing the inflows of the first quarter of the previous 11 years, says global real estate consultancy Cushman & Wakefield. The residential sector gained prominence in inflows with the highest ever inflows in 10 quarters, as investors look to gain from government incentives in affordable housing.
During the quarter, private equity inflows into the residential sector more than doubled (year-on-year) to Rs 85.18 billion (USD 1.32 billion), backed by a large platform transaction between Housing Development Financial Corporation (HDFC) and Abu Dhabi Investment Authority (ADIA). Mumbai accounted for approximately 19 percent of the total deals in the residential sector.
Mumbai witnessed the highest investments during the quarter with inflows of Rs 63.3 billion (USD 947 million), primarily led by the office sector. The city also noted the largest investment transaction for the quarter, the stake acquisition by Blackstone in two office projects of Indiabulls Real Estate, says the report.
Office sector, recorded inflows of Rs 61 billion (USD 913 million), which is a 40 percent decline from the corresponding quarter last year. The decline in investments is due to the postponement of the closure of certain notable transactions to forthcoming quarters.
The country’s buoyant office sector continues to attract heightened interest from foreign investors who are building up a portfolio of rent-yielding assets and thereby altering the ownership pattern (between developers and private equity investors) of office stock in major cities.