Realty sector gets Rs 240 bn investment in H1 on improving capital values

The real estate sector received an investment of around Rs 240.11 billion in the first half of 2018 due to rise in buyers' confidence on Rera implementation and improving capital values, a report said.

IT parks and commercial real estate got the biggest investment share of $ 2,000 million or around Rs 131.51 billion, followed by retail real estate at around $ 300 million or Rs 18.98 billion, the joint report by industry body CII and property consultant JLL said on Thursday.

"In the first half of 2018, total investments in the sector stood at $ 3,616 million or around Rs 240.11 billion," the report said.

The year 2017 witnessed some large deals between institutional investors and Indian companies, with private equity investments in real estate touching $ 44 billion, according to the report.

"We anticipate investment flows will continue on a healthy course. This has been substantiated by the H1 data of 2018 with cumulative PE investments crossing $ 45 billion," it said.

Home sales velocity in the first half of 2018 rose by 25 per cent year-onyear, which according to the report can be attributed to returning buyers' confidence on account of implementation of Rera in most states and stable capital values, which have started to show an upward trend.
 

JLL India chief executive officer and country head Ramesh Nair said this has been the trend despite the fact that the Reserve Bank of India has increase the repo rate in its August monetary policy review, making home loans dearer.

"As more and more developers register with Rera, we anticipate residential markets to pick up pace," he added.

The first half of 2018 saw corporate leasing activity rise by a 54 per cent year-on-year, driven by large technology companies, co-working, financial services and global in-house data centres.

Companies leased around 24 million sq ft of office space in the first half, around eight million sq ft more than in H1 2017, according to the report.
 

Bengaluru and NCR contributed the most to this growth, with a 26 per cent share each.

"This trend... is a reflection of the current thriving business environment. Occupiers are not only inclined towards space take-up as part of their consolidation/relocation plans but also geared towards expansion-driven space strategy which points towards an upswing in the business cycle," said Nair.

In the retail real estate sector, net absorption rose over 75 per cent to 1.9 million sq ft in H1 2018.