The total inflows into the real estate sector saw a yearly decline of 31 percent in H1 2019 – from $3.2 billion in H1 2018 to nearly $2.2 billion in H1 2019.
A majority government at the centre is gradually reviving private equity's confidence in Indian real estate — especially the commercial sector. ANAROCK research indicates that PE players infused $ 580 million into Indian real estate in the month of June, immediately after Modi 2.0 took charge.
That said, the general elections predictably cast a shadow on funding into Indian real estate. The total inflows into the real estate sector saw a yearly decline of 31 percent in H1 2019 – from $3.2 billion in H1 2018 to nearly $2.2 billion in H1 2019. Also, the IL&FS default last year and RBI's tightening norms for NBFC and HFC lending to real estate had a severe impact, to say the least.
Of the total funding into the sector in H1 2019:
Mumbai attracted the maximum — 24 percent — of the overall inflows into the sector amounting to $530 million. Pune followed with nearly $250 million coming in from institutional investors — an increase of 97 percent for Mumbai’s immediate neighbour since H1 2018.
H1 2019 Funding: Sector-wise breakup
Even while caution prevails over the current market dynamics, the incumbent's government proactive initiatives across sectors will doubtlessly cause more private equity inflows into the real estate sector.
While Indian commercial real estate's overall attractiveness for institutional funds is now well-established, the residential sector is also likely to become increasingly interesting in the back of the government's determined push to affordable housing.
Shobhit Agarwal is MD and CEO of ANAROCK Capital.
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