Private equity investment in real estate sector dips 15 pc

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SME Times News Bureau | 30 Oct, 2012
The Indian real estate sector has seen a drop of 15 percent in private equity investments in the first three quarters of 2012 as compared to last year, a report said.

According to the latest investment market report from real estate consultancy Cushman & Wakefield, the first three quarters of calendar year 2012 witnessed a fall in the quantum of investment, recorded at Rs.35 billion which is approximately 15 percent lower than the same period last year.

"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," said Sanjay Dutt, executive managing director (South Asia), Cushman & Wakefield.

"However, recent policy initiatives, opportunities in key markets such as NCR (National Capital Region), Mumbai, Pune, Bangalore and Chennai should turn things around in the coming quarter and make up for the shortfall," he added.

According to Dutt, of the total Rs.35 billion invested, Mumbai continued to be the preferred destination for private equity investments followed closely by Bangalore and NCR.

He also said that the residential segment witnessed the maximum private equity investments with the share of deals of the total private equity investments increasing by nine percent in first three quarters of 2012 compared to 2011.

According to the report, of the total investment in first three quarters of 2012, the first quarter saw majority of the investments at Rs.21 billion while the remaining two quarters recorded Rs 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, the report said.

Mumbai, Delhi and NCR and Bangalore have received majority of investments over the years. However, their share had reduced from 84 percent in the first three quarters of 2011 to 78 percent in same period this year. Other cities including Pune, Chennai and Hyderabad have witnessed steady interest from private equity investors.