Bangalore sees highest PE investment in realty market

The realty market in Bangalore saw the maximum private equity investment in the country, at nearly Rs2,000 crore, during January-September 2013, with increased demand for leased office assets from institutional investors, according to property consultant Cushman & Wakefield.

PE investment in Bangalore (or Bengaluru) rose by 79 per cent to Rs1,979 crore during the first three quarters of 2013 calendar year as compared to Rs1,106 crore in the year ago period, C&W said in a report.

"Bengaluru witnessed the highest level of announced investment value in 2013 at Rs1,979 crore ($317 million). This was due to a commitment by a sovereign fund into a platform focused on leased office assets," C&W said.

Explaining the reason behind Bengaluru emerging on top in PE investment, C&W executive managing director South Asia Sanjay Dutt said, "Bengaluru is an information technology capital and hub for south India. The profile of developers in the city is very good."

He also attributed higher PE investments in Bengaluru to availability of properties across all segments at reasonable and attractive valuations.

Sobha Developers, Puravankara Projects, Prestige Estates and Brigade group are the major developers in Bangaluru.

According to the report, PE investment in Pune jumped more than three-fold to Rs780 crore during January-September period against Rs234 crore in the same period last year.

The Delhi National Capital Region (NCR) realty market got Rs612 crore as PE investment, up by 20 per cent from Rs512 crore during the period under review. In NCR, all the investments were made in the residential asset class.

Mumbai, which traditionally attracts the maximum investments in the country, was the only city to witness a decline of 43 per cent in PE investments. India's financial capital received Rs720 crore during the first three quarters of 2013, compared with Rs1,262 crore in the year-ago period.

"However, investment activity in Mumbai is expected to increase with a few large deals entailing an investment of Rs2,000 crore in office assets currently in the pipeline," the consultant said.

Overall, PE investment in the real estate sector grew by 26 per cent to Rs4,716 crore in the first nine months of this year despite slowdown in the property market.

"The healthy increase was primarily due to a rise in investments in leased income generating office properties by institutional investors. Apart from offshore funds, domestic capital allocated for income generating office properties is also being raised and deployed," C&W said.