Investment by private equity real estate firms into Indian retail properties looks set to break previous records.
According to data from global property services firm JLL, the total private equity real estate investment into the sector during the first five months of the year stood at $149 million.
“This has beaten most industry experts' expectations. The figure has also exceeded investment attracted by Indian retail industry in the year 2007 and could very well cross the previous high seen in 2008,” said in a report Shobhit Agarwal, managing director – Capital Markets, JLL India.
“PE investment into retail almost dried out after 2008 until the year 2015, with 2012 being the only exception.”
The biggest deal in the sector so far this year came from Singaporean sovereign wealth fund GIC, which invested INR 10 billion ($149 million; €135 million) into Sheth Developers' Viviana mall earlier this year.
There are also other $100 million-plus deals in the pipeline, said Agarwal. For instance, The Blackstone Group is currently in the process of investing $224 million in L&T Realty's Seawoods Grand Central Mumbai project.
“Economic and political stability, liberalization of the FDI policy by the Modi government and improvement in the consumer sentiment are some of the factors working in retail and retail real estate's favor,” said Agarwal.
“Quality mall space is coming up with strong pre-commitments, which indicates that retailers also continue to remain bullish about the long-term India consumption story.”