Major Investments in the Real Estate Sector in India 2014-15

The prime office space segment across the country’s key cities- Mumbai, the National Capital Region (NCR), Pune and Bengaluru has witnessed a fresh supply infusion of more than 20 million square feet (sq ft) in the first six months of 2013, witnessing a growth of 16 per cent on year-on-year (y-o-y) basis, as per a report by CBRE.

The country is ranked 20th among the top global markets for real estate investment in 2012, with investments worth US$ 3.4 billion during the year, according to a latest report by Cushman & Wakefield. It is also estimated that foreign direct investment (FDI) into real estate in India will increase to US$ 25 billion over the next 10 years.

Construction development sector (including townships, housing, built-up infrastructure & construction-development projects) has attracted a cumulative FDI worth US$ 22,247.50 million from April 2000 to June 2013. FDI flows into the construction (infrastructure) activities during the period stood at US$ 2,198.77 million, according to the department of industrial policy and promotion (DIPP). Private equity (PE) investments in real estate investment, reveals that approximately Rs 118.54 billion is available with private equity firms ready to be deployed in real estate, despite a drop in the PE investment in the first half of 2013.

While PE investments in real estate was recorded at Rs 16.38 billion in H1 2013, which is 46% lower when compared to first half of 2012 (Rs 30.50 billion), PE funds continue to show keen interest in the market with a number of deals in discussion. This decline in the quantum of private equity real estate investment (PERE) was essentially due to fewer deals (13 in H1 2013) as the average ticket size of deals remained the same.

The total value of investments in the residential segment recorded at Rs 9.3 billion in H1 2013 witnessed a drop of 48% over last year. The total value of investments in the office segment was also lower in H1 2013 at Rs 7.0 billion. However, there is a strong growing trend towards investments in ready office space. The growing stability of the market is reflected by the continuous growth of the core investors (number and value) with over Rs 77.05 billion invested in ready office space during the last three years. In 2013, the highest value of private equity investments is noted in Pune at Rs 7.8 billion followed by Mumbai at Rs 4billion, NCR at Rs 2.3 billion, and Bengaluru at Rs 1billion.

Some of the major investments in the Indian real estate sector are:

Ø  Ashiana Housing Ltd plans to foray into Gujarat's real estate with its first project worth Rs 100 crore (US$ 18.01 million) at Halol

Ø  Mr Akhilesh Yadav, Chief Minister of Uttar Pradesh (UP) has inaugurated and laid the foundation of development projects worth Rs 3,337 crore (US$ 601.21 million) pertaining to Noida, Greater Noida and Yamuna Expressway

Ø  Wave Infratech plans to invest Rs 500 crore (US$ 90.08 million) to set up its first affordable housing venture in the Delhi national capital region (NCR) area

Ø  Mahindra Life space Developers has bought the stake of private equity Arch Capital in its joint venture residential project at Chennai. The buyout of the stake was estimated to be around Rs 70 crore (US$ 12.61 million)

Ø  Godrej Properties Ltd (GPL) has signed a development management agreement with United Oxygen Company Pvt Ltd to develop residential housing project in Bengaluru. The project will offer approximately 1,000,000 sq. ft. of saleable area and will be developed as a residential housing project

Ø  Peninsula Land has signed an agreement to buy a five-acre property in the Byculla area of Mumbai from its joint owners, Mahindra Lifespaces, the realty arm of Mahindra Group, and the Kanorias, for around Rs 650 crore (US$ 96.45 million)

Ø  Godrej Properties Ltd (GPL) has entered into an agreement to develop 37 acres in Panvel, Maharashtra. The company will receive 35 per cent of the profits from the development

Ø  Cushman & Wakefield has entered into an agreement to acquire Singapore-based project management specialist company Project Solution Group (PSG). The acquisition is aligned with the firm's global strategy to strengthen its operations in the Asia-Pacific

Ø  Reliance Industries is expanding its presence in Africa's real estate sector. The firm acquired 10 prime plots of land in Nairobi, Kenya, for around Rs 202 crore (US$ 29.97 million)

Ø  Germany-based SEA Group, engaged in the living space solutions segment, plans to invest Rs 40 crore (US$ 5.94 million) over the next two years in its Indian operations