Despite tepid consumer spending, the total Private Equity (PE) inflows into Indian retail real estate market hit a new high in 2019 touching $970 million - a 19 per cent share of the total $5 billion PE investment in overall Indian real estate, reveals research by Anarock Capital.
While commercial offices topped the funding charts, the retail sector witnessed the second-highest investments from various PE funds in 2019.
According to Shobhit Agarwal, MD and CEO, Anarock Capital, Compared to 2018, total PE inflows into Indian retail saw an almost three-fold jump in investments – from $355 million in 2018 to over $970 million in 2019.
“Back in 2018, retail inflows stood at a mere $355 million, comprising just 7 per cent share of the total private equity (PE) funds. In the previous five years, after 2019, year 2017 saw the second-highest PE inflows in retail at $890 million,” he said.
Interestingly, in 2019, Delhi-NCR received the maximum PE inflows of about $610 million – a massive 63 per cent share of the total retail funds into Indian realty during this period. Between 2015 and 2019, it received retail-focused inflows at over $750 million. MMR was second with $410 million, followed by Pune at nearly $150 million.
Agarwal added that investors are betting big on selected Grade-A mall projects which have high scope of business profitability.
“Despite the consumption slump, many malls are doing excellent business today - and investors are keenly vying for such projects. PE funds see the ongoing consumerism slump in India as a seasonal phenomenon and that the enthusiastic government backing to the retail sector will cause the tide to turn in the near future,” he explained.
Apart from the top cities, Tier 2 & 3 cities are also on the radar of many PE funds which see these cities actively driving retail going forward. At least 36 per cent (nearly $1 billion) retail-focused funds went to cities like Ahmedabad, Amritsar, Bhubaneshwar, Chandigarh, Nagpur and Mohali.
Overall PE inflows in Indian retail touched $2.8 billion in the five years between 2015 and 2019.