Residential Segment under Private Equity Funds’ Spotlight

Private-Equity-Investmnet-in-Residential-Segment

According to the property consultant Jones Lang LaSalle (JLL), private equity firms are recording a significant change in their pattern of investment, shifting their focus from diversified funding to the residential segment.

During the period of 2007-2008, PE investors made every possible effort to invest in the Indian economy and its real estate sector and had a more diverse pattern of investment wherein they invested their money across every other asset category. But a change in their investment mannerism was noticed as they increasingly diverted their focus from other asset classes and fixed their attention on the residential segment in India. This shows that investors are becoming more and more conscious about where to invest their funds, feels Anuj Puri, Chairman and Country Head, JLL India.

In 2007-2008, while 66 per cent of the PE funds were diversified, the scenario transformed significantly after 2014, bringing down these figures to a mere number. On the other hand, the funds that were focused on the residential segments have risen from a meager 14 per cent to 85 per cent post 2014, tipping the scales in favour of the residential real estate sector.

These changing trends, opines Anuj Puri, bear testimony of the changing investor interests. The investors have changed their approach towards investing, shifting their attention from various asset classes to the residential segment. This is because the residential segment has given the investors maximum returns over and again.

JLL stated that “When we compare the quantum of activities in last 18 months to investments between 2009 and 2013 that were worth $3.9 billion, this uptick is clearly evident. Per year investment has increased two times.” The Indian real estate sector has received private equity investments worth $2.2 billion since 2014. This figure does not take into account the platform level deals that cost another $2 billion!

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