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Institutional Funding Declined Compared To Previous Year



Institutional Funding Declined Compared To Previous Year

Though Modi government’s push to affordable housing has revived the sentiment, institutional funding to the sector witnessed a 31 percent decline

The fund supply in the real estate sector reduced considerably due to a number of factors like general elections, the IL&FS default and RBI’s stringent norms for NBFC and HFC. Institutional funding worth $2.3 billion was pumped into the real estate sector in the first half of 2019. This indicates a decline of 31 percent year-on-year (YoY) compared to $3.2 bn in the first half of 2018. 

Just after Modi 2.0 took charge, private equity players invested $580 million into the real estate market in June. Mumbai saw the highest inflow, nearly 24 percent of the overall inflow into the sector amounting to $530 million. 

National Capital Region, on the other hand, attracted minimal inflows. Pune attracted $250 million from institutional investors, a 97 percent increase since the first half of 2018, as per a report by ANAROCK Capital. 

Commercial real estate drew $1.4 billion investments and residential real estate attracted over $270 million. 

A look into the total funding into the sector in the first half of 2019 reveals that private equity inflows accounted for over $2.1 billion. $140 million was contributed by NBFCs/HFCs. 

In the first half of 2018, private equity funding stood at $2.6 billion. Funding from NBFCs/HFCs saw a decline from $520 million in the first half of 2018 to $140 million in the first half of 2019. The decline accounts for 73 percent.

Coming to the total funding in the first half of 2019, 89 percent of $2.2 billion funding was equity funding. 11 percent was debt. In the first half of 2018, equity funding had 83 percent share while debt stood at 17 percent. 

Shobhit Agarwal, MD and CEO – ANAROCK Capital, said, “Even while caution prevails over the current market dynamics, the incumbent’s government proactive initiatives across sectors will doubtlessly cause more private equity inflows into the real estate sector. While Indian commercial real estate’s overall attractiveness for institutional funds is now well-established, the residential sector is also likely to become increasingly interesting in the back of the government’s determined push to affordable housing.”

Source: Moneycontrol

ALSO READ: Haryana’s Affordable Housing Policy Amended

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