Office spaces attract private equity investors' attention

Mumbai: The private equity investors have significantly upped their investments in office assets in top Indian cities during the first quarter of 2017 suggesting an improvement in business expansions going forward.

The commercial office assets recorded investments to the tune of Rs 5,630 crore accounting for 59 per cent of the total investments made during the period according to property consultant Cushman & Wakefield. This has been the highest private equity inflow in office assets since 2009.

During the quarter, the investment in office assets was 93 per cent higher when compared Rs 2,900 crore invested in the same period last year with an average deal size of Rs 940 crore. The residential real estate sector, which was one of the worst impacted following the note ban in late 2016 also saw a significant amount of interest from private equity investors accounting for 37 per cent of the total investments.

The residential realty projects received investment worth Rs 3,600 crore during the January — March period, 56.52 per cent higher that Q1 2016.

“Office assets receiving a record investment inflow speak of investors’ confidence in this asset class. The office space is expected to continue to see more interest from the investors in the coming years. By the end of the year, we are expected to see at least 2 -3 large portfolio level deals that would be further pushing the total private equity investment in office market,” said Anshul Jain, MD, Cushman & Wakefield.

During Q1 2017, Mumbai was the preferred location for investments accounting for 49 per cent of the total investments at Rs 4,700 crore followed by Bengaluru, Delhi, Hyderabad, Chennai and Pune. Within Mumbai, commercial office assets accounted for the majority share (77 per cent). Bengaluru stood second receiving 13 per cent of total investments at Rs 1,250 crore.