The sun is shining brightly on the Indian realty sector and how! After reports of growth in sales figures and new launches, recent reports have indicated that investments have gone up exponentially in the sector as well. What this basically means is that the real estate sector which was long beleaguered by the impact of several factors, is finally having its long-due moment in the sun. And it’s been well deserved as many would say!
Investments rise considerably in Q1 2019
Investment volumes in the country have gone up to a record level of $2.5 billion as reported in several studies for Q1 2019. The residential category contributed approximately 20.9% of total inflows in terms of private equity which stands at Rs. 3,697 crore for the quarter in question. Reports have stated that approximately Rs. 17,600 crore was invested in the real estate sector for the period mentioned and this indicates growing global confidence in the country’s property market. Investment volumes have been doubled and this is also the highest investment volume for the first quarter over 10 years as per experts.
The upward movement is attributed to several factors such as reforms which favour the investor, positive market sentiments after the listing of the first REIT (Real Estate Investment Trust) in the country and solid fundamental factors in the market overall. The growth that has been witnessed has surpassed the investment volumes in first quarters of all years ever since the year 2008 as per studies. The increased participation of global investors in the first quarter of 2019 is an indicator of interest that has been kept alive in the real estate journey of the country supported by higher transparency and friendlier policies for investments.
There are multiple opportunities that have come up in the logistics and warehousing categories along with steady growth in the retail and office property segments as per reports. The listing of the country’s first successful Real Estate Investment Trust (REIT) has led to the opening of an extra avenue for investors to take part in the momentum that has been seen across Indian office markets. This has also boosted the overall viability and attractiveness of real estate in India. The REIT listing was eagerly awaited by several investors and industry watchers. The listing was over-subscribed to the tune of 2.57 times in a bid by Embassy Office Parks (supported by Blackstone) for raising Rs. 4,750 crore.
In case this turns out to be a major success on the basis of returns that are promised to investors and actually generated in the long run, there will be a smoother foundation for the generation of many other listings from institutional investors who have already been creating solid portfolios of assets that yield handsome rentals over the last few years or so.
Other key market trends worth considering
Foreign investors continued their retention of positive sentiments for investments in real estate in India. They held a major chunk of 64% in investment volumes on a quarterly basis. There were several platforms that were established by several Indian and foreign investors which also accounted for a handsome 19% of overall investments received in the PE (private equity) space. A big chunk of investments that were deployed by foreign investors was majorly in the commercial or office space category which got 54% of overall volumes while 27% was garnered by the mainstream hospitality sector.
Mumbai was the most preferred investment destination with overall share of investments standing at 30.5% and Bangalore garnered 27.3% overall. Major institutional investors for the quarter included PE biggies like Abu Dhabi Investment Authority and also Blackstone along with Brookfield Asset Management. The residential real estate category drew 20.9% of overall private equity investments for this quarter which is also an impressive figure by all means. The office sector drew Rs. 7,925 crore or roughly $1.14 billion which indicated growth of 30% from the year ago period.
Investments in hospitality have also tripled over the last four years and this indicates steady growth in the offing for this space as well. All in all, the first quarter of 2019 was a good one for the Indian real estate sector going by the investments accrued and the other key trends which highlight increases in sales figures, new launches and overall customer demand. Indian real estate is definitely witnessing its Achche Din as experts state and this has been possible due to pro-active Government measures in recent times. One hopes that the positive momentum continues in the near future as well.