Hyderabad: Singapore investors are betting big on Hyderabad real estate and major private equity (PE) companies are investing billions of dollars into the city, surpassing Bengaluru and Chennai in funds inflow.
Sharing insights, Shobhit Agarwal, MD & CEO, Anarock Capital told Telangana Today, “Hyderabad has seen total PE inflow of nearly $1.5 billion (more than Rs 10,500 crore) over the last four years (2015-2018). Of this total, nearly $875 million (Rs 6,125 crore) came in from Singapore-based PE investors including Ascendas, Xander and GIC. If we look at specifically 2017 and 2018, the overall PE funds from these companies touched over $750 million (more than Rs 5,250 crore).”
He added, “Out of all Singapore-based investors, Ascendas has shown maximum interest in Hyderabad and that too in commercial properties. GIC invested nearly $77 million (about Rs 540 crore) in 2015 in ICICI Venture’s Waverock project. The city witnessed a sudden burst in PE investments in 2018, attracting more than $1.1 billion (Rs 7,700 crore), more than three-fold increase in investments compared to the collective previous three-year period. The city also surpassed Bengaluru and Chennai in total PE inflows in 2018. While Bengaluru saw nearly $420 million (Rs 2,940 crore) pumped into the city, Chennai saw PE inflow of $670 million (Rs 4,690 crore) during the same period. So far, in Q1 2019, there was a small investment of nearly $44 million (Rs 308 crore) by UAE-based Lakeshore in retail segment.”
Since 2015, GIC invested close to $2.5 billion (Rs 17,500 crore), mainly in Hyderabad, Mumbai, Chennai, Bengaluru, and the National Capital Region (NCR). Between 2015 and 2016, Singapore-based PE firms invested $1.15 billion (Rs 8,050 crore) into Indian real estate. This saw a three-fold jump between 2017 and 2018 to nearly $3.5 bn (Rs 24,500 crore).
When asked, what makes Hyderabad attractive to PE investors, Agarwal said, “Increased office leasing activity in the last few years has positioned Hyderabad as one of the most active commercial markets in the south. This is backed by supportive government policies and strong political stability. The city also offers the lowest office rentals in comparison to top markets in south India including Chennai and Bengaluru.”
As per Anarock research, of the total $14.01 billion (over Rs 90,000 crore) PE funds that came into Indian realty between 2015 and 2018, about one-third is pumped in by Singapore-based firms. Over the last few years, Indian developers were being forced to explore debt and equity funding from various private equity companies, with funding from banks and non-banking financial companies (NBFCs) drying up.
The US-based investors pumped in nearly $4 billion (Rs 48,000 crore) during 2015-2018 and more than $700 million (Rs 4,900 crore) in the first three months of 2019 in India. Canadian PE companies, led by Brookefield, were the third-largest investors into Indian real estate over the last four years, with PE infusions close to $2.3 billion (Rs 16,100 crore).