Institutional Flow of Funds to Indian Real Estate by Haris Bin Murshid Vice President – Sales Skydeck Infrastructure
The year 2018 has been very good for the real estate sector in India total institutional fund inflow has reached the highest about $5.5 billion in last year. This was possible due to the strong steps taken by the present govt. On policy front as well as a slew of measures to put back the economy on the growth path. If we look at the Fund flow in the Indian Real estate market a meagre of $ 1 billion was invested in the year 2009 as reported it has gone up many folds in the year 2018 the country’s property sector has got a major chunk of investment in last 5-6 years.
The investment trend in the later part of the period between 2009 – 2018 has seen the growth doubling in last 4 years reports from JLL suggests, which clearly shows that the measures and the regulatory framework to bring this sector from an unregulated sector to regulated sector taken by the govt. has drawn flakes at that time for the stability of this sector has shown results and the faith of Institutional Investor in Real Estate Sector has grown up many folds.
Many emerging Institutional platforms has given more space to the Investors to play an active role in choosing the project of their choice. This trend seems to stay a bit longer as this time the investment is more towards the Commercial office spaces which emerged a hot favourite of the investors. As per the Knight Frank report, about 40% of the total pie of investment in infrastructure development goes to the commercial segment.
If we analyse the data 80 per cent of the institutional fund which was pumped into the Indian Real Estate is from the private equity proportion of the sovereign wealth is between 43-45 percent of the total private which is an actual increase in 3 times higher than the sovereign wealth fund investment in the Year 2009-13 as compared to 2014-18.
Real Estate Regulatory Authority in the last 4 years was able to control the builders and real estate law to curb benami deals another step of demonetisation have together made India a lucrative real estate investment hub, establishment Real Estate Investment Trust (REIT) policy over the last three years which has bought transparency and accountability in this sector has also helped to achieve these investment figures. Going forward another sector to look into Real Estate is affordable housing, retail, industrial and warehousing in areas of National Capital Region, Bengaluru and Mumbai as leaders. We are also looking forward to the REIT performance to open the sector further and also gives developers a chance to exit or convert their holdings into tradable stocks, through income generating assets.
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