Will 2016 be the top year for PE investments?
Over the past two years, the real estate industry has suffered a major downfall. Some investment from the Private Equity (PE) sector was expected to improve the performance of this industry. During 2015, as much as INR 19,500 cr was invested in the real estate sector by PE funds. The metro cities in India have benefited immensely from it.
The following is the break-up of the investment flow :
The Government of Singapore Investment Corp. Pvt. Ltd. invested approximately INR 1,990 Crore in two of the projects with DLF Home Developers in Delhi. The Blackstone group invested INR 1,060 Crore for purchasing another office in the suburbs of Mumbai and an affiliate of Warburg Pincus invested INR 1,800 crore in Piramal Realty, the real estate subsidiary of Piramal Group.
Even though the Private Equity investment concentrated only on the residential and office projects, there have also been significant investment in the field of entity-level deals. These deals were carefully drawn based on decisive factors such as the reputation of the developers, their previous track record in various projects, etc. The total amount invested in entity-level deals is up to INR 6,048 Cr.
Breaking up the investments in terms of the assets, residential and office complexes continue to attract majority of the investors while retail projects is still looking up with the amount of investments it has received.
While there were also Foreign Direct Investment from various sources, they were very minimal as their main focus involved only Tier-1 developers. Many of the domestic investors benefited from the investments from the domestic market.
Many Japanese and Chinese investors are viewing India as one of the major investment destinations. The growing demand and the increasing purchasing power are factors that are key towards boosting India as an investment destination. The real estate market, especially the luxury segment, is witnessing unparalleled growth in demand and is attracting interest from across the globe. The surge in demand is expected to surpass the peak in investments witnessed in the year 2006.
One of the advantages of buyers is that due to the investments received, funds from both domestic and foreign domains the rates of lending money from the non-banking finance companies have reduced considerably. If the trend continues to remain this way, 2016 will remain on top in terms of investments for real-estate industry....