Bengaluru real estate gets maximum PE investment of Rs 1,979 cr

Private equity investment in Bengaluru rose by 79% to Rs 1,979 crore during first three quarters of 2013

Bengaluru's realty market received the maximum private equity investment of nearly Rs 2,000 crore in the country during January-September 2013 with increased demand for leased office assets from institutional investors, according to property consultant Cushman & Wakefield.

Private equity (PE) investment in Bengaluru rose by 79% to Rs 1,979 crore during the first three quarters of 2013 calendar year as compared to Rs 1,106 crore in the year ago period, C&W said in a report.

"Bengaluru witnessed the highest level of announced investment value in 2013 at Rs 1,979 crore ($317 million). This was due to a commitment by a sovereign fund into a platform focused on leased office assets," C&W said.

Explaining the reason behind Bengaluru emerging on top in PE investment, C&W Executive Managing Director South Asia Sanjay Dutt said: "Bengaluru is an IT capital and hub for south India. Profile of developers in the city is very good."

He also attributed higher PE investments in Bengaluru to availability of properties across all segments at a reasonable and attractive valuations.

Sobha Developers, Puravankara Projects, Prestige Estates and Brigade group are the major developers in Bangaluru.

According to the report, PE investment in Pune jumped more than three-fold to Rs 780 crore during January-September period against Rs 234 crore in the same period last year.

National Capital Region's (NCR) realty market got Rs 612 crore as PE investment, up by 20% from Rs 512 crore during the period under review. In NCR, all the investments were made in the residential asset class.

Mumbai, which traditionally attracted the maximum investments in the country, was the only city to witness a decline of 43% in PE investments. The financial capital received Rs 720 crore during the first three quarters of 2013 compared with Rs 1,262 crore in the year ago period.

"However, investment activity in the city (Mumbai) is expected to increase with a few large deals entailing an investment of Rs 2,000 crore in office assets currently in the pipeline," the consultant said.

Overall, PE investment in the real estate sector grew by 26% to Rs 4,716 crore in the first nine months of this year despite slowdown in the property market.

"The healthy increase was primarily due to a rise in investments in leased income generating office properties by institutional investors. Apart from offshore funds, domestic capital allocated for income generating office properties is also being raised and deployed," C&W said.