Mumbai’s Office Spaces Got Most Private Equity Investment, Says Knight Frank

Mumbai remains the go-to destination for private equity investment in Indian office spaces, according to a study.

India's second-largest city and its financial capital netted nearly Rs 23,400 crore, or 40 percent of the Rs 59,100 crore PE investments into office assets in India, a report by real estate consultancy Knight Frank India titled ‘Realty Asset Monetisation 2018 – An Overview', said.

PE investments in 2017 jumped to $8.6 billion (Rs 59,100 crore) from $2.5 billion (Rs 17,200 crore) in 2014 — at a compounded annual growth of 36 percent, the real estate consultant added.

According to Knight Frank, PE players are bullish on the real estate sector due to government reforms in the sector, including the Real Estate and Regulatory Act of 2017, demonetisation and the push for affordable housing.

“The real estate industry has been through a churn over the past few years due to a slew of structural reforms,” said Shishir Baijal, chairman and managing director of Knight Frank India. “This led to a reduction in investment risk perception coupled with availability of matured assets.”

The retail and warehouse, in particular, have seen renewed interest, Bajaj “While office market remains strong, a closer look indicates the once-overlooked segments of retail and warehouse have seen renewed interest from global institutional investors.”

Other Highlights

• Between 2011-17, average investment per deal has more than doubled from $40 million (Rs 270 crore) to $102 million (Rs 700 crore).
• In the first half of 2018, Rs 33,700 crore has been invested across 31 deals, averaging $158 million (Rs 1,080 crore) per deal.
• This is almost four times the average in 2011.
• Bulk of the investments are in the commercial sector.
• Warehousing space has witnessed good traction.
• Investors are keen on greenfield projects in warehousing bagging 72 percent of the funding in the segment.