Investment flow into real estate drops 31% to $2.2 bn during January-June driven by liquidity crisis in NBFCs: Anarock

New Delhi: Investment flow into real estate fell 31 percent to $2.2 billion during the first half of this year, mainly due to liquidity crisis in NBFC, according to property consultant Anarock.

The total inflow into the sector stood at $3.2 billion in the corresponding period of the previous year, the consultant said in a statement.

Out of the total $2.2 billion of inflows, commercial real estate attracted the lion’s share at 64 percent amounting to over $1.4 billion. Residential real estate attracted over $270 million, retail real estate $260 million and logistics & warehousing nearly $200 million.

The inflows from private equity (PE) players stood at over $2.1 billion, while a mere $140 million came in from non-banking finance companies (NBFCs) and housing finance companies (HFCs). Of the total $2.2 billion funding, over 89 percent was equity funding and the rest in debt form.

“A majority government at the Centre is gradually reviving private equity’s confidence in Indian real estate — especially the commercial sector. Our research indicates that PE players infused $580 million into Indian real estate in the month of June, immediately after Modi 2.0 took charge,” said Shobhit Agarwal, managing director and chief executive officer, Anarock Capital.

“That said, the general elections predictably cast a shadow on funding into Indian real estate. Also, the IL&FS default last year and the RBI’s tightening norms for NBFC and HFC lending to real estate had a severe impact, to say the least,” he added.