PE funds invested Rs 4,800 crore in realty sector during Jan-Mar quarter

NEW DELHI: Private equity funds pumped in about Rs 4,800 crore in the realty sector mainly in corporate land deals in the January-March quarter, property consultant CBRE said today.

These investments came at a time when sector faced liquidity crunch, high land acquisition costs, and stringent due diligence from the banking sector-which continues to perceive real estate as a high-risk domain in India, CBRE added.

"For the quarter ended March 2014, nearly USD 800 million was invested into India's real estate sector. This translates to almost Rs 4,800 crore having been injected into the sector through the private equity route over the past few months," CBRE said in a release.

More than 60 per cent of the realty investments observed during the quarter under review were seen to be the sale of land parcels by corporate entities, primarily in the Mumbai metropolitan region (MMR), to realty developers for housing development projects, CBRE said in a release.

CBRE elaborated that industrial assets, such as IT SEZs were most sought after due to comparatively better yields over residential assets, stable returns and strong occupier demand. The first quarter of 2014 saw quite a few investments in built-up commercial assets.

"The quarter also witnessed developers seeking equity investment partners with several Indian developers generating cash by disposing off their non-core assets and/or forming joint venture partnerships with investors to develop realty projects," CBRE said.

According to CBRE analysis, other key investment trends observed during the quarter were land transactions, investments in built-up commercial assets, and the sale of non-core assets by business entities.

The realty consultant also added that more platform deals and equity stake acquisitions are expected to be seen in the forthcoming quarters.