2021-11-08-莱坊-India_Investment_Guide_Analysis_of_Institutional_Funding_in_Real_Estate_24页_2mb

Overall Fund Flow Trend: Institutional funding in India's real estate sector increased by 40% from USD 3.8 bn in 2011 to USD 5.4 bn in 2016, driven by USD appreciation and robust flow, while institutional funds now account for 60% of requirements via private equity (PE), contrasting with less than 25% in 2010. Bank credit declined to 24%-26%, and IPO routes became inactive due to market credibility issues.

Asset Class-wise Funding: In 2016, office segment saw a 35% share in PE funding, rising from 18% in 2015, due to strong demand and low vacancy. Residential funding shifted due to unsold inventory, while retail attracted investments from shortages and rising rentals. IT parks' share dropped to 6-8%, reflecting caution from PE players due to slowdowns in Western markets.

Type of PE Investors and Instruments: Sovereign and pension funds' share fell drastically (under 8% in 2016 vs. one-fourth in 2013), replaced by foreign investors like Blackstone and GIC. Equity funding shifted towards project-level investments (less than 1% entity-level in 2016), with a clear move to debt/structured debt, now accounting for over one-third of PE funding.

City-wise PE Fund Flow: NCR's PE share dropped from 39% in 2013 to 9% in 2016 due to poor sales and inventory issues; Mumbai attracted 57% in 2016 with major deals like Brookfield's Powai acquisition. Bengaluru held steady in attracting PE funds.

Purpose of Fund Raising: In 2016, refinancing existing loans emerged as a key reason (up 6-8 percentage points), aided by falling interest rates; asset purchase and project completion continued as primary drivers, while land acquisition funding dropped sharply due to lack of major deals.

Outlook: Demonetization of high-denomination notes is expected to severely impact land transactions, causing price rationalization and reduced deals, while office and retail segments may see capital value increases. Investment in affordable housing is poised to grow with budget incentives, creating opportunities for institutional funds and structured debt refinancing.