Real Estate Alert: On account of a pro-active government approach towards stuck residential projects, residential real estate sector has registered around 49 per cent rise in private equity (PE) inflow in 2019. Compared to $265 million in 2018, the residential real estate attracted $395 million PE inflow in the year 2019 — registering around 49 per cent rise from its previous year's PE inflow. In total, Indian real estate attracted more than $5 bn private equity inflows in entire 2019 - recording a marginal drop of 2 per cent against the preceding year - reveals ANAROCK’s latest study. 

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Commercial real estate maintained its numero uno position, attracting $3.3 bn of PE funds in 2019 as against $3.8 bn in 2018. MMR and NCR were the top favourites for private equity investors in 2019; together, the two regions received close to USD 2.7 bn PE funds, comprising a whopping 53% overall share. Previously in 2018, rather than NCR, it was Hyderabad that was on top in the radar of private equity investors.

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The commercial segment continued to lure investors in 2019, with total PE inflows crossing 3.3 bn - though reducing by 13 per cent on yearly basis. Meanwhile, both the retail and residential segments saw an uptick in investments in 2019 against the preceding year. The retail sector was a major draw for PE funds in 2019, receiving total PE inflows of $970 mn in as against $355 mn in 2018 – an annual rise of over 170 per cent. The residential sector received PE inflows of $395 mn in 2019 against $265 mn in 2018.

Commenting on the findings Shobhit Agarwal, MD & CEO – ANAROCK Capital said, "In sharp contrast to previous years, investors are now showing a keen interest in last-mile funding for stuck/delayed residential projects. This, along with the Government support of Rs 25,000 crore for stressed projects, will go a long way in relieving residential real estate from its woes.” 

Agarwal went on to add that in 2019, other than commercial real estate, the retail segment also garnered considerable attention from private equity, based on the high demand for organized retail spaces across the country. Residential saw some green shoots of revival in 2019 and this will continue in 2020 as the Government’s distress funds are deployed.