India’s private equity inflow in realty sector remains robust

V Nagarajan

India’s fourth quarter last year recorded private equity investment inflows of INR 89.5 billion ($1.08 billion), a 50 per cent drop in investment receipts as compared to the previous quarter but of similar value as seen during the same period last year (Q4-21).

Multi-city investments accounted for 75 per cent of the fund inflows in Q4, with a major QIP equity investment in Macrotech Developers and structured debt investment in Shapoorji Pallonji Real Estate group, according to Cushman & Wakefield India survey on investment trends in real estate.

Amongst cities, Mumbai (35%) witnessed highest share of inflows, closely followed by Delhi (32%) and Pune (25%).

Residential segment witnessed highest investor interest during the quarter with inflows of INR 56.12 billion ($ 0.68 billion), accounting for almost 63 per cent share.

With improving sales growth in luxury segment units and revival in housing sales, there is healthy investor confidence in the residential sector.

The quarterly inflow into office segment stood at INR 19 billion ($0.23 billion) and industrial segment witnessed inflows of INR 15 billion ($0.17 billion).

For the whole year, total investment inflow recorded was close to INR 408 billion ($5.23 billion).

In 2022, multi-city investments accounted for 39 per cent share in total inflow followed by Mumbai alone with 28 per cent share, and Delhi at 12 per cent.

Commercial office segment took the highest 33 per cent share in total investments, followed by residential sector with 26 per cent share and industrial segment at 23 per cent.

Foreign Investors accounted for almost INR 350 billion ($4.44 Billion) with investment inflows from entities in Canada (36.11%), Singapore (18%) and USA (14%). Foreign investment inflows were majorly in office and industrial segments.

 Fund raising activity: This year witnessed a fund raising announcement of close to $2.37 billion in office and residential segment, driven by Kotak-ADIA, Hines India and Capita Land.

With the DRHP filed with SEBI, India’s maiden Retail REIT IPO is expected to launch over next few weeks for $500 million. Kotak Mahindra Bank, after its successful fund-raise for office and residential sector in recent past, has plans to raise $1.0 billion to par-take in the growing data centre business in India, as colocation data centers are expected to add around 1460 MW of installed capacity in India over next 4-5 years.

After spearheading successful office REITs, Blackstone Group in association with Panchashil group and Salarpuria Sattva are planning to launch another office REIT of close to 45 million sqft portfolio.

This portfolio is spread across Mumbai, Bengaluru and NCR and is expected to be valued at INR 75 billion ($0.95 billion).

Another REIT in the works is DLF-GIC portfolio of 35-40 million sf of commercial (office-retail) assets.

The quarter recorded corporate transaction volumes of INR 17.22 billion ($0.21 billion), a q-o-q increase of 24 per cent.

Bengaluru constituted a majority share of 57 per cent of the total investment volume during the quarter, followed by Mumbai with a 26% share.

Overall, year 2022, witnessed a transaction value of close to INR 56.96 billion ($0.65 billion) which is 2.2x times from that seen on y-o-y basis.

I have been in the Gulf for the past 10 years and wish to invest in my friend’s firm engaged in real estate business in India.  Are there any restrictions to invest?  Shashi Gurung, Sharjah.

No. NRIs are not allowed to invest in a firm or proprietorship concern in India engaged in any agricultural/plantation activity or real estate business.

We are in the process of selling our deceased father’s real estate assets in India with two legal heirs in India and I am located in the Gulf.  Due to dislocation I am unable to travel.  Can a power of attorney resolve the situation to close the transaction?  Manish Mishra, Dubai.   

Yes. You will have to get attestation of the specific power of attorney in the Gulf with the Indian consulate. You may grant PoA to either of the two legal heirs in India for the purpose of executing and registration of sale deed. Once it is received in India, it has to be stamped and signed with the appropriate stamp duty.