- The Indian real estate sector has seen a lot of international investments over the past few years - many of which seems to have come from one source:
Singapore . - In fact, out of the $14 billion worth of
private equity investments that have been pumped into India’s realty sector between 2015 and 2018, nearly a third of that total has come from entities based in Singapore. - And they’re not just focussed on commercial properties. They are also investing in logistics, factories and warehousing, as per
ANAROCK ’s report, “Private Equity in Indian Real Estate”.
The Indian real estate sector has seen a lot of international investments over the past few years - many of which seems to have come from one source: Singapore.
In fact, out of the $14 billion worth of private equity investments that have been pumped into India’s realty sector between 2015 and 2018, nearly a third of that total has come from entities based in Singapore, according to ANAROCK, a
The investments, which have come from private equity firms like the state-backed GIC, Ascendas and Xander, have been gradually rising. While they put in a total of $1.15 billion in 2015 and 2016, the amount tripled to $3.5 billion in 2017 and 2018.
And they’re not just focussed on commercial properties. They are also investing in logistics, factories and warehousing, as per ANAROCK’s report, “Private Equity in Indian Real Estate.”
A big deal came at the end of 2017, when GIC, Singapore’s sovereign wealth fund, took a 33% stake in DLF, an Indian realty major, in a ₹90 billion deal.
The investments from Singapore comes at an opportune time for Indian property developers. As the IL&FS crisis led to a liquidity crunch in the housing finance sector, property developers have been relying more on private equity as a source of funding.
But why are these Singaporean firms so interested in India?
Shobit Agarwal, the CEO of ANAROCK, thinks the answer is pretty straightforward. “Apart from the increased ease of doing business, the launch of REITs and the considerable thrust on infrastructure development, such funds see the indubitable growth potential in India today,” says Agarwal. Besides, their historic familiarity with India doesn’t hurt either, he adds.
Hence, a more conducive regulatory environment works in India’s favour.
However, it would be a mistake to think that investors in Singapore are specifically focussed on India. Their interest in India dovetails with a larger trend of the expansion of Singapore’s private equity majors into global property markets.
As Chinese investors have retreated from global property markets amid capital controls at home, Singapore’s private equity firms are filling the gap, writes Nicholas Spiro for the South China Morning Post.
In fact, as Chinese outbound real estate investments fell by 84% to less than $5 billion last year, Singaporean firms spent nearly $25 billion on international property investments - 40% of which were in Asia- according to Real Capital Analytics.
Interestingly, Singaporean firms are looking abroad for property investment opportunities amid a dearth of investable assets and compressed yields at home.
“Singapore is the largest source of Asian capital in global real estate investments in 2018 and this is driven by limited opportunities and compressed yields in the domestic market” says Yvonne Siew, an executive director at CBRE, a commercial real estate investor.
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