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PE investments into real estate decline by 19% in FY18: Report

Press Trust of India  |  Mumbai 

(PE) investments into the country's sector declined by 19 per cent year on year in financial year 2017-18, said a report.

The decline in PE could reflect turbulence in the sector, property consultancy said in its report.

"But going by the numbers for the last few years, excluding the major brownfield investments worth more than USD 500 million, the investments have been on an increasing trend since 2014 and the strong momentum which was observed in FY17 has sustained in FY18," it added.

The overall PE investments, however, dropped by a marginal 5 per cent in FY18, according to the study.

In FY17, there have been several large-ticket brownfield transactions particularly in commercial covering office and (malls).

The 4-billion deal between and and the USD 1-billion deal between Hiranandani and Brookfield elevated the total investments for FY17, according to the report.

said such transactions do not happen often due to the sheer size of assets that are involved in the transactions, as those assets have a long gestation period and take more than a decade to mature and become operationally efficient.

The report said that the structural reforms introduced by the government over the past 2-3 years have helped the sector to move towards a relatively transparent environment.

"This transformation has attracted a significant number of organised players," it added.

Among the asset classes, the residential sector is reeling under pressure for the last 3-4 years but commercial real estate is performing well.

"While the office market is maintaining its robust annual transaction volumes, retail spaces, particularly select shopping centres in tier I and II cities are catching the attention of international funds," the report said.

Warehousing is one of the most promising sectors in India, according to Knight Frank, as the implementation of the GST, continued government focus on building industrial corridors and the unabated growth of the Indian consumption market have whipped up the growth potential of the sector.

Meanwhile, the report said investors have pumped in around USD 24 billion in the form of debt and equity into real estate since FY15.

While the into residential asset between FY15 and FY18 were primarily in the form of structured debt mainly due to the inherent risk of the sector, those into commercial assets were in the form of equity.

Out of USD 24 billion, around USD 10 billion (42 per cent) was in the form of equity investments into commercial assets such as prime office assets and

According to the consultancy, the last couple of years have seen unprecedented interest for good quality rent-yielding office and in cities across among global financial institutions such as the giants, sovereign funds and wealth funds.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, April 24 2018. 20:15 IST
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