Foreign PE investment in realty has risen by 33% : Report
Image Courtesy :- The Hindu Business Line
The total private equity investments from foreign funds in Indian real estate increased 33 per cent from $1,676 million (approximately Rs 11,306 crores) in 2014 to $2,220 million (approximately Rs 14,974 crore) in 2015, Cushman & Wakefield, the global real estate consultancy, has said.
Owing to high property prices and high investment potential, Mumbai accounted for about 35 per cent of the total foreign investments in 2015, followed by Delhi NCR with about 25 per cent of investment, according to a report by Cushman & Wakefield.
The structured debt deals, which are investments that are primarily debt transactions organised in a manner that offers assured returns to investors, accounted for almost half (49 per cent in value terms) of the total PE investments in 2015.
These structured debt deals are an attractive investment option for investors as it is fully secured and guarantees returns on pre-decided terms. The structured deal strategy, though moderated due to increased competition, offers returns in the range of 15–17 per cent.
While only 18 per cent of total foreign PE investments were structured debt, about 94 per cent of the domestic PE investments adopted the structured deal strategy for investments during 2015, the report said.
“The three large cities-- Mumbai, Bengaluru and Delhi-NCR continue to attract the highest investments in India and account for about 75 per cent of these investments,” Sanjay Dutt, managing director at Cushman & Wakefield India, said. However, with government initiatives to de-stress these cities, relaxed FDI norms and focus to improve infrastructure across the country, other cities in India are likely to witness rise in PE investments going forward.
“These initiatives have made India as one of the largest markets for real estate investments offering a huge investment potential to foreign investors that were largely restricted until now,” Dutt said.
The FDI policy enforced conditions with regards to project status, project size, lock-in and periods. due to which the eligible stock of real estate projects for foreign investors was limited predominantly to large projects with development size of over 0.54 million sq ft.
Owing to relaxation in FDI norms in 2014 and 2015 the entire real estate stock is now accessible to foreign investors, the report said.
At the end of 2015, the Indian real estate market is estimated to have investment potential of $ 54 billion to $ 67 billion in completed grade A office stock that can generate $ 5.4 billion of rental income. On the residential side, the market potential includes over 900,000 units that are scheduled for completion in the coming four years, the report estimated.
Owing to high property prices and high investment potential, Mumbai accounted for about 35 per cent of the total foreign investments in 2015, followed by Delhi NCR with about 25 per cent of investment, according to a report by Cushman & Wakefield.
The structured debt deals, which are investments that are primarily debt transactions organised in a manner that offers assured returns to investors, accounted for almost half (49 per cent in value terms) of the total PE investments in 2015.
These structured debt deals are an attractive investment option for investors as it is fully secured and guarantees returns on pre-decided terms. The structured deal strategy, though moderated due to increased competition, offers returns in the range of 15–17 per cent.
While only 18 per cent of total foreign PE investments were structured debt, about 94 per cent of the domestic PE investments adopted the structured deal strategy for investments during 2015, the report said.
“The three large cities-- Mumbai, Bengaluru and Delhi-NCR continue to attract the highest investments in India and account for about 75 per cent of these investments,” Sanjay Dutt, managing director at Cushman & Wakefield India, said. However, with government initiatives to de-stress these cities, relaxed FDI norms and focus to improve infrastructure across the country, other cities in India are likely to witness rise in PE investments going forward.
“These initiatives have made India as one of the largest markets for real estate investments offering a huge investment potential to foreign investors that were largely restricted until now,” Dutt said.
The FDI policy enforced conditions with regards to project status, project size, lock-in and periods. due to which the eligible stock of real estate projects for foreign investors was limited predominantly to large projects with development size of over 0.54 million sq ft.
Owing to relaxation in FDI norms in 2014 and 2015 the entire real estate stock is now accessible to foreign investors, the report said.
At the end of 2015, the Indian real estate market is estimated to have investment potential of $ 54 billion to $ 67 billion in completed grade A office stock that can generate $ 5.4 billion of rental income. On the residential side, the market potential includes over 900,000 units that are scheduled for completion in the coming four years, the report estimated.
- by Michael Gonsalves
Source :- Financial Chronicle
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