Mumbai, Jan 23 (PTI) With India emerging as anattractive investment destination, private equity inflow inreal estate is likely to reach USD 100 billion by 2026, arecent survey says.
According to property consultant JLL, inthe next 10 years, private equity inflow in the sector islikely to grow at 10 per cent CAGR to USD 100 billion by 2026,with tier 1 and 2 cities being the prime beneficiaries of it.
In the past 12 years (2006–2017) India has seeninvestments of USD 42 billion, while the next 10 years(2017–2026) is expected to see inflows to the tune of USD 58billion, the report said.
"India's attractiveness as a global investmentdestination has been steadily rising. We have seen numerousmeasures that have created a positive economic environment,bringing in key factors like transparency, accountability andease of entry into various sectors in India. This gives Indiaa fillip in attracting capital," JLL India CEO and CountryHead Ramesh Nair said.
He further said these initiatives would be the keyfactor for private equity to bet big on the sector in future.
"We will see the flood gates open the time REITs arelisted in the market. This would give the developers an optionto exit or convert their holdings in to tradable stocks,through income generating assets. Further, with the currentsize of the economy and its steady growth with GDP pegged over7 per cent year–on–year for the next 3–5 years," Nair said.
Private equity inflows in for the last 3 years,between 2014 and 2017 in office and IT/ITES have risen by 150per cent with a strong attraction towards office sector.
Though residential sector remained the highestinvested sector, rise in the same period was just 5 per centof total investment flows in pure equity, the report said.
"Debt structures dominate the fund inflows in theresidential sector, which is key reason for why developersare overleveraged. This is on account of the generalsluggishness in the residential markets and investorsunwilling to take the downside risk," the study pointed out.
With increased transparency and regulations, JLLexpects a return of equity to residential markets in 2018.
Another key insight is that except office and residential, allsectors combined add up to only 30 per cent of totalinvestments since 2014.
"Investors are yet to explore the possibilities of newasset classes which will show strong trends in the nearfuture. Alternate assets classes such as retail, industrial,warehousing and alternatives will be promising," Nair said.
Private equity in the last few years has beenconcentrated on the cities of Mumbai, Bangalore and Delhi-NCR.
According to the report, Mumbai witnessed the highestpercentage at 31 per cent of PE investment, followed by DelhiNCR at 27 per cent and Bengaluru at 12 per cent. The tier 2and other markets have seen limited activities and attractionof private equity funding. PTI PSK DSKDSK.
This is unedited, unformatted feed from the Press Trust of India wire.