Track2Realty: The first three quarters of 2012 witnessed a fall in the quantum of private equity investments in the real estate sector. The private equity investments is recorded at INR 35 billion which is approximately 15% lower than same period last year. The total number of private equity transactions till date in 2012 is 23, marginally lower when compared to same period last year. These are the findings of the latest Investment market report from real estate consultancy Cushman & Wakefield, India.
Of the total investment in first three quarters of 2012, the first quarter saw majority of the investments at INR 21 billion while the remaining two quarters recorded INR 13.8 billion. While the second and third quarters depict a drop in investment volumes, the real estate sector continues to attract steady investments during the year.
Sanjay Dutt, Executive Managing Director – South Asia, Cushman & Wakefield said, “The Indian real estate sector has seen a drop of 15% in Private equity investments in the first three quarters of the calendar year 2012 compared to a year ago. The reason for the fall in number of deals was mainly due to a lot of concerns on the government policy front coupled with an uncertain investment scenario, valuation and continued focus on exits for some vintage funds. However, recent policy initiatives, opportunities in key markets such as NCR, Mumbai, Pune, Bengaluru & Chennai should turn things around in the coming quarter and make up for the shortfall. Of the total INR 35 billion invested, Mumbai continued to be the preferred destination for private equity investments followed closely by Bengaluru and NCR. The residential segment witnessed the maximum private equity investments with the share of deals of the total private equity investments increasing by 9% in first three quarters of 2012 compared to 2011. Income yielding office also continues to interest & attract investors.”
Most of the deals in 2012 were executed through Special Purpose Vehicles (SPV) in contrast to last year where investments were witnessed in both entity and SPV level as they provide greater transparency and accountability along with ease of exit.
During YTD 2012, Mumbai continued to be the preferred destination for private equity investments followed closely by Bengaluru and NCR for the year 2012. The three major cities have received majority of investments over the years. However, their share had reduced from 84% in the first three quarters of 2011 to 78% in same period this year. Other cities including Pune, Chennai and Hyderabad have witnessed steady interest from private equity investors.
The residential segment witnessed maximum private equity investments at INR 20.6 billion during the first three quarters of 2012. The share of residential deals of the total private equity investments has increased by 9% in first three quarters of 2012 over same period of 2011, although the quantum of investments have been similar during the two periods.
The office segment also continued to attract investment with a higher number of deals over last year. However it saw a decline in investment volume by 12% during the first three quarters of 2012 compared to same period last year due to lower average deal size. Approximately INR 6.1 billion of the private equity investment in real estate during 2012 was in leased commercial assets, considerably lower than the same period in the previous year that saw investments of INR 15 billion.
