The favourite asset segments for domestic and foreign investors have always been office real estate and residential, and the market of residential property has got a slight edge over the commercial segment in the first quarter of 2017.
During the first quarter, several residential projects pulled an investment worth more than Rs.26000 crore. On the other hand, commercial projects pulled an investment of almost half the amount, that is, Rs.13600 crore.
Out of the total investment of, land pulled 2.5% of it at Rs.1065 crore and retail only managed to pull 2% at Rs.870 crore because of the scarcity of supply in quality malls. These figures of investment are derived from the blend of equity and debt.
In the years from 2010 to 2016, private equity and institutional investors have favoured the residential asset class over the office asset class. However, equity flows have seen a downfall in the residential sector in the past few years, and this has paved the way for debt and structured instruments.
The downfall that the office class asset has witnessed is the reason that investors have become a little careful and have turned to construction debt and packaging receivables so that their investments are safe against the bond of the asset. However, commercial market saw the strengthening of equity flows, showing that big investors are interested in equity positions.
The constant increase of equity share financing clearly shows that investors want to be project partners and also their positive outlook for commercial assets.
