2017 expected to be a landmark year for the bright future of domestic PE investments in India

By : 360 Realtors

05 September, 2017

The recent important announcements made by the Indian government are going to change the way the investors look at the Indian economy. With so many landmark reforms being implemented like RERA, GST, introduction of REIT’s, etc., it is going to gather considerable interest from Private Equity (PE) funding in the real estate sector. With many states setting up their real estate regulators, the year 2017 will be landmark year for setting new benchmarks of domestic PE inflows into the Indian realty industry. This positivity will not only attract more foreign investments and businesses into the country but also help the domestic investors to regain their lost confidence.

The recent announcements made that shall have a huge impact on the PE inflows into the real estate sector are

  • Approval of Goods & Services Tax
  • Infrastructure status to Affordable Housing
  • Introduction of Real Estate Investment Trusts
  • Interest subsidy on home loan under Pradhan Mantri Awas Yojna
  • Ease of Foreign Direct Investment norms
  • Implementation of RERA
  • Change in definition of affordable housing to carpet areas 30 and 60 sq. m.

Backed by this improving regulatory framework, India seems to be an attractive option for both domestic and foreign investors.  Further adding glitter to the glory of the entire situation, the results of the recent state elections have confirmed that the Central government will work more for introducing new policies and improving on the existing ones in order to promote the growth and development in different sectors, especially the Real Estate.

The last two-three years have already experienced a positive change in the private equity investment scene as the domestic investments have exceeded the foreign investments. The domestic private equity inflow in 2016 crossed its benchmark made in the year 2007. The total domestic PE inflow in the year 2016 was US $3410 mn, which was almost double than the year 2015 which saw an investment of US $ 1770 mn. The previous peak touched in the year 2007 stood at US$ 3,300 mn.  The PE inflow from foreign investments in 2015 stood at US$ 1,540 mn and further rose to US$ 1,850 mn in 2016 as compared to a corresponding figure of US $4600 mn in 2007, which was the highest.
Thus, analyzing the above mentioned data, we can say that the equity investments are consistently rising since last 3 years and are on their return journey to India. Supported by the drastic changes and reforms taking place in the country’s economic and political scenario, the domestic investors seem to have regained their confidence in the Indian Real Estate and have realized the potential of the same resulting in an increase in the amount of investments made. 
The local knowledge of all the positive changes taking place in the country has also made them more confident as compared to their foreign counterparts. The revolutionary changes taking place are expected to make the system more transparent and reliable as required, boosting both consumer and investor confidence.