PEs pick commercial real estate over residential

Commercial real estate investments from institutional investors are at a four-year high in India as investments in residential projects have dropped to a four-year low, according to a new report from Anarock Consultants. The commercial office segment saw the highest inflows, accounting for a massive 70 per cent share of the total institutional investments in the industry in 2018. Retail real estate came in a distant second with 7 per cent, and the residential sector drew the least private equity among the three sectors, with less than 7 per cent of the overall share. The report says of the total PE inflows of $14 billion in the sector in the last four years, 2017 and 2018 collectively saw maximum investments to the tune of $8.6 billion. Shobhit Agarwal, MD & CEO - ANAROCK Capital says, “Currently, funding is a major hurdle for Indian real estate’s growth prospects – especially post the NBFC crisis. Private equity funding is the best alternative for developers, who qualify for it. Despite a decline of 9 per cent in PE inflows in 2018 against the preceding year, 2019 will bring a marked increase in private equity funding because of India’s first REIT listing."