PE investment in real estate sector rises 22% y-o-y in Jan-Sept 2016: Report

Mumbai: Private equity investment in the real estate sector has grown 22 percent during January-September this year to Rs 28,300 crore, from Rs 23,200 crore a year ago, reflecting improved confidence among investors to make larger investments, says a Cushman & Wakefield report.

According to the report, private equity inflow increased to Rs 28,300 crore during the period, out of which nearly Rs 9,200 crore were recorded during the third quarter (July-September) of 2016.

While the number of deals closed during the third quarter moderately declined by 3 percent quarter-on-quarter (q-o-q) to 32 per cent, the total investments increased by 1.2 percent, reflecting increased confidence amongst investors to make larger investments.

The average deal size, therefore, increased from Rs 275 crore in Q2 2016 to Rs 287 crore in the third quarter of 2016.

"Owing to the continued interest in pre-leased office assets, the investments in the commercial office assets have already surpassed the total investment received during the calendar year 2015," the report said.

The y-o-y change in investment in office assets has recorded an increase by over 50 per cent as registered in the third quarter.

"Moreover with a few large deals for office portfolios in active discussion and deal closure stages, the fourth quarter (October-December 2016) is expected to record the highest annual investments made in the asset class," it said.

Residential assets in real estate sector witnessed over 73 percent or Rs 6,675 crore of the total investment during July-Spetember 2016.

"Despite the largest share in total volumes, investments saw a moderate 3 percent decline when compared to that received in the same period in 2015," it said.

Within residential investments, Mumbai was the most preferred location that accounted for 63 percent of the share, followed by Delhi-NCR and Bengaluru, accounting for 18 percent and 15 percent of the share, respectively.