MoneyTree™ India Q4 2017

In 2017, India witnessed the highest investment in almost a decade from private equity in real estate (PERE). The differentiating factor this year has been the dominance of the commercial office and warehousing segment as compared to residential, which had been attracting the lion’s share of investments till last year. GIC’s investment in DLF Assets and CPPIB’s joint venture with Indostar for its warehousing platform were the marquee deals that defined the PERE landscape last year. Next year, the key segments to look out for would be office, warehousing and affordable housing, as far as PERE is concerned. As the demand for good quality commercial office space continues to grow, institutional capital would continue to build its portfolio of leased assets. GST is already bringing changes in logistics/supply chains through the consolidation of warehousing/logistics facilities, thereby creating enough scale to attract PE investments. The policy boost towards affordable housing is likely to bring significant PE interest as institutions like IFC and HDFC have a dedicated large corpus for this segment. With the current supply overhang in the mid- to high-income residential segment slowly paring down in the coming years, PE shall be sought for these projects, given that RERA has disincentivised funding through customer advances.

BFSI continues to attract a lot of interest against the backdrop of some definitive structural measures such as demonetisation, the introduction of the Insolvency and Bankruptcy Code, recapitalisation of banks, increase in FDI limits in insurance and the steady flow of recurring subscriptions in the domestic asset and wealth management business. BFSI players, along with fintech disruptors, are set to broaden the distribution of financial products and expand market share.