Investor Confidence Rises in the Realty Sector in India

Investor confidence rises in the realty sector in India as they pump in a record $2.5 billion or Rs 17,600 crore in the first quarter of year 2019. This is recorded as one of the highest first quarter inflows since 2008. The upward movement is supported by the regulatory changes in the sector like RERA, GST and Demonetization and the launch of the first ever REIT (Real Estate Investment Trust) in India, which has given an unprecedented boost to the investors’ confidence in the market.

The first REIT listing, during the quarter (Jan-March 2019), by Blackstone-backed Embassy Office parks to raise Rs 4750 crore was well received with an over subscription of 2.57 times. This has opened doors for the retail investors to invest in the real estate. REITs are like mutual funds for the real estate sector. They collect funds from investors and put the money into real estate. The returns they earn from rental income and sale of property is distributed as dividends to investors. So retail investors can now invest in real estate without spending large sums of money. Moreover REITs are listed on the exchange and can be freely bought and sold, with increased liquidity.

Navdeep Sardana, Founder, Elite Landbase says “The success of the Embassy Office Parks REIT listing has paved the way for more such listings by institutional investors who have been in the process of building up a portfolio of rent yielding assets in the past few years. This will definitely give boost to the embattled real estate sector.”

There are bright prospects in the warehousing and logistics segment with office and retail sector investments. Foreign investors hold 64% share in the quarterly investment volume, whereas partnerships and platforms set up by the foreign investors and Indian counterparts hold 19% of the total private equity investments during the quarter.

Private equity majors Blackstone, Brookfield Asset Management and Abu Dhabi Investment Authority were among the key institutional investors during the quarter. Mumbai led the investment activity among all the cities during the period with a 30.5% share in the overall investments followed by Bengaluru with 27.3% share.

With the momentum built by the private equity investors, the Indian real estate sector will see through a sustainable growth trajectory in the FY 2019-20 and thus the current year is a good time for people to invest in commercial properties in Gurgaon, Pune, Mumbai and Bengaluru.

References: Media Reports, Economic Times, Press Releases

Disclaimer: This information has been collected through secondary research and Elite Landbase is not responsible for any errors in the same.

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