Real estate investment platforms, JVs raise $6 bn to date for India: JLL

India-focused real estate investment platforms and joint ventures (JVs) have raised $6 billion (Rs 44 billion) till date, says a new study. Of this, $905 million (Rs 66 billion) was raised in the current year till date. 

At $1.9 billion (Rs 140 billion), 2017 saw the highest annual fund raising by the platforms and JVs, says a study by property consultant JLL.

“This significant rise in fund raising has been driven by investors seeking more direct control over their investments. Focused strategy and objectives have been key in facilitating deal evaluation and faster decision making. These platforms aim at building a long-term partnership with developers across various real estate asset classes,” said Ramesh Nair, chief executive and country head at JLL India.

About as 38 per cent each of the capital raised has gone into residential and grade-A office spaces, the report said. Within the overall residential space, affordable housing has 71 per cent share of the financing committed by these platforms. Recent instances include Prestige Estate Projects and HDFC Capital Advisors committing Rs 2.5 billion to affordable housing projects.

Among other asset classes, the retail (individual loan) segment has had a share of about 12 per cent in the funding raised. Mall developer Phoenix Mills and CPPIB forming an investment platform of around $250 million in 2016 and APG-Xander Group co-investing $450 million in 2017 are some examples.

“Beside investing in operating malls, these funds have acquired greenfield (completely new) projects as well, thus taking up the role of a developer. Apart from providing growth capital, these platforms will also bring global expertise and best practices in retail assets. The retail sector is likely to find investors for core assets in smaller urban centres, while platform structures will also gain prominence with players who have managed to show sustained performance,” Nair said.

The industrial and warehousing segment, 12 per cent of the total capital raised by investment platform funds, is expected to witness a big shift. “Post the goods and services tax, we are witnessing consolidation and emergence of large warehouses in certain sectors. This will provide a conducive environment for technology to flourish. Robotics, Internet of Things and artificial intelligence will bring a paradigm shift with efficiencies and economies of scale. The government’s focus on ‘Make in India’ and industrial corridors is expected to drive increased demand for warehousing space. Large funds with patient capital have an opportunity to earn superior risk-adjusted returns from this segment. This asset class is expected to be the emerging major theme for investors,” he said.