Indian real estate attracted $14 billion foreign PE in five years

Bengaluru: Indian real estate attracted nearly $14 billion of foreign private equity (PE) between 2015 and third quarter of 2019, says latest Anarock data.

Sixty-three per cent (approximately $8.8 billion) of the total foreign investments backed commercial real estate, the real estate services company said.

The residential sector attracted just $1.5 billion of foreign PE in the same period, trailing even the retail sector which saw cumulative inflows of $1.7 billion.

Logistics and warehousing drew over $1 billion, and the remaining investments went into mixed-use developments.

In stark contrast, domestic PE funds pumped nearly $2.4 billion into Indian real estate since 2015, of which nearly 71 per cent (approximately $1.7 billion) went to

the housing sector, Anarock said.

This was a period of considerable stress for the residential segment; domestic funds invested heavily into a sector plagued by issues like delayed/stalled units, low sales and fairly lower yields.

This made exiting investments with substantial gains difficult, it said. The commercial real estate segment, on the other hand, delivered a comparatively stellar performance in the last five years.

Steady demand and rising rentals gave foreign investors a decisive edge.

The top five foreign investors - Blackstone, Brookfield, GIC, Ascendas and Xander - alone contributed 75 per cent of the overall $14 billion into Indian real estate.

Interestingly, their focus was not limited to the top seven cities and extended into tier 2 cities like Indore, Ahmedabad and Amritsar.

The top five domestic funds - Motilal Oswal, HDFC Venture, Kotak Realty, ASK Group and Aditya Birla PE - invested nearly 54 per cent or approximately $1.3 billion into Indian real estate. They focused exclusively on the top seven cities.

Indian commercial real estate will continue to attract PE funds as there is high demand for Grade A office spaces across the top Indian cities, according to Anarock.

Earlier data indicated that the first three quarters of 2019 alone saw inflows of $3 billion in the commercial segment - an increase of 43 per cent over the corresponding period in 2018.