'PE Investment in Real Estate May Rise 30% to $4 Billion This Year'

New Delhi: Private equity investment in India's real estate sector is estimated to rise by 30 percent to $ 4 billion (about Rs 25,665 crore) this year on the back of DLF-GIC joint venture in a rental arm, says realty consultant Knight Frank.

PE investment in real estate was $3.1 billion last year, it said.

"Private equity investment in 2017 is estimated to exceed $4 billion this year, well past the 2015 mark," Knight Frank said. In 2015, PE investment stood at $ 3.5 billion.

Last month, DLF's promoters announced sale of 40 percent stake in a rental arm DLF Cyber City Developers Ltd (DCCDL) for Rs 11,900 crore, which included sale of shares to Singapore's sovereign wealth fund GIC for Rs 8,900 crore.

"Singapore had the highest investment per deal on account of a single big ticket GIC-DLF deal," the consultant said.

However, majority of private equity investors in 2017 are domestic, followed by those from US and Canada.

"More than 80 percent of the PE capital contributors in 2017 were long-term sovereign and pension funds. Low risk appetite among investors trigger shift in investments share from the residential sector to pre-leased office and retail assets," the statement said.

Samantak Das, Chief Economist and National Director-Research, Knight Frank India, said institutional funds dominated in the private equity investments, reflecting long term confidence in India's strong economic fundamentals.

He said there has been a dramatic shift in capital movement from the residential sector to pre-leased office and retail assets.

However, he said investors would revisit the residential sector on the back of the reforms-driven new order with focus towards affordable housing projects.

"In residential sector, the private equity investors would continue to remain cautious with a majority of them waiting out for current consolidation cycle, driven by both the market and regulatory forces, to run its full course before they re-enter into that space," Knight Frank India Executive Director & Head- Capital Markets Rajeev Bairathi.