Jan-Sep 2013: Investments rose to 53%
Regardless of the sluggish growth projection by the RBI because of high interest rates and bummed out industrial production, the Indian realty segment still stands out as one of the most remunerative sectors of the nation. The phenomenon holds true with the fact that investment in the realty sector during the first three quarters of 2013 rose to 53%, much more in comparison to the same tenure in the last year.
Surge in private equity investments fuelled the increase, according to market analysts. The commercial segment bore witness to the majority of the investments in 2013. The possibility of REITs hitting the road soon and India’s commercial assets cropping high rentals has managed to garner the attention of domestic and global investment firms alike. This has led to the absorption of high office space in 2013.
PE investments in 2013
As per global realty consultants, affinity of the investors towards leased generating office buildings has what triggered PE investments in the Indian realty sector. On account of high construction costs, corporate companies shifted to cheaper areas. This, as a result, kicked off investments in lease generating office properties that boosted PE investments.
In comparison to other prime cities, Bangalore managed to pull off the majority of PE investments during the first 9 months of 2013. Investments of Rs 2000 crore has been recorded during the period Q1-Q3 2013. While PE investments in Pune stood at Rs 780 crore, NCR attracted Rs 612 crore during Jan-Sep 2013, much more in comparison to the same period last year.
Investment in commercial assets kicked off
The year 2013 was the period when commercial assets saw investments from various sources. However, the investors laid emphasis on high-income yielding assets that includes minimal risk and guaranteed good returns, instead of eying on new constructions. Stable rentals and low risk profile have done the trick for the segment and brought it under the radar of investors.
Around 45-50% of the amount accumulated(via investment from different sources) in the last two years have been invested till date and by the end of Q3-Q4 2014 the remaining sum is likely to get invested. Asked about the ideal locations, property consultants rate Mumbai, Bangalore, NCR and Pune as the most lucrative destinations for the investments, since it offers bulk employment in the nation.
