Indian Real Estate Attracted $5 bn Private Equity in 2019

Mumbai Metropolitan Region, MMR, and National Capital Region, NCR, are the top favourites of private equity investors; in 2019 the two regions received almost $2.7 billion of PE funds accounting for 53% of the overall private equity inflow. In 2019, the Indian real estate sector attracted more than $5 billion PE inflow; a drop of 2% than in 2018, a study by Anarock Capital stated.

Notably in 2019, other than commercial real estate, the retail segment also garnered considerable attention from private equity, based on the high demand for organized retail spaces across the country.

While, MMR remained the hottest investment destination for private equity funds, it was NCR that stood out in 2019. MMR saw 19% jump in total PE inflows in 2019 – from over $1.5 bn in 2018 to more than $1.8 bn in 2019, NCR stood out with total PE inflows of over $845 mn in 2019 as against just $195 mn in 2018. The IT hubs of Pune and Bangalore attracted private equity funds of approx. $390 mn and $615 mn respectively in 2019. Both cities saw inflows rise by 210% and 47% respectively in a year. Hyderabad - the showstopper of 2018 – attracted private equity funds of just $440 mn in 2019 against $1.1 bn in 2018. PE players largely steered clear of the Chennai real estate market in 2019 - the city saw inflows decline by 45% in a year, from $675 mn in 2018 to $370 mn in 2019. Kolkata failed to garner any PE interest in 2019 as well. There were no investments in both the years.

In terms of segments, the commercial real estate maintained its top position and attracted acting $3.3 bn of PE funds in 2019 as against $3.8 bn in 2018 while the residential sector received an inflow of $395 mn in 2019 against $265 mn in 2018. The retail sector was a major draw for PE funds in 2019, receiving total PE inflows of $970 mn in 2019 as against $355 mn in 2018, an increase of over 170%. Logistics and warehousing segment attracted about $200 mn PE and mixed-use developments saw inflows of about $155 mn in 2019, as against $310 mn in 2018. "Residential saw some green shoots of revival in 2019 and this will continue in 2020 as the government’s distress funds are deployed. In sharp contrast to previous years, investors are now showing a keen interest in last-mile funding for stuck/delayed residential projects. This, along with the government support of Rs 25,000 crore for stressed projects, will go a long way in relieving residential real estate from its woes,” remarked Shobhit Agarwal, MD & CEO – Anarock Capital.


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