Foreign fund flows to Indian retail real estate market doubled to $1.2 bn in 2017-18: report

Private funds have invested nearly $1.2 billion in retail real estate market in India during the calendar years 2017 and 2018, almost double from such investments in the previous two years, according to property consultant Anarock.

The consultant attribute the sharp rise in private fund flows to the retail real estate market to further liberalisation in FDI policies such as 51 per cent FDI in multi-brand retail and 100 per cent FDI in single-brand retail under the automatic route.
Overseas investment in India retail realty sector stood at $600 million during the 2015 and 2016 calendar years, according to Anarock estimates.
Over the four years between 2015 and 2018, foreign investors have bought retail real estate in India worth $1.84 billion. Of this, tier II and tier III cities attracted nearly 48 per cent funds ($880 million) while tier 1 cities attracted investment of $960 million.
Among tier II and tier III cities, cities like Amritsar, Ahmedabad, Bhubaneshwar, Chandigarh, Indore and Mohali emerged the most attractive for retail real estate investments.
Amon investors, US-based funds like Blackstone and Goldman Sachs remained the most active with investments of more than $1 billion between 2015-2018, while UAE, Singapore, Canada and Netherlands based funds ale were active.
"Our report highlights the fact that unlike the commercial office sector, retail is to some extent geography-agnostic because its success depends on the spending power of its target audience,” Shobhit Agarwal, MD and CEO of Anarock Capital, stated in a release.
"As a result, shopping malls in tier II and tier III cities have performed as well as, if not better than, their tier 1 counterparts. This also led to increase in rentals and profitability and caused PE investors to start considering investment options outside their accustomed tier I geographies,” he added.
"The opportunity that the Indian retail sector holds in store for PE investors is more than evident - as are the geographies they must focus on for optimum returns,” said Anuj Kejriwal, MD & CEO of Anarock Retail.
Around 39 million sq ft of organised retail space is expected to enter the market between 2019 and 2022. Of this, around 71 per cent is expected to come up in tier I cities, and the remaining 29 per cent in tier II and tier III citiesas oer Anarock data, Kejriwal added.