The Real Estate M&A and Private Equity Review: India

Overview of the market

India has undertaken significant structural reforms and the result is evident in improved rankings by 14 positions in the World Bank's 2020 ease of doing business index, with salient improvements being seen in starting a business, dealing with construction permits and resolving insolvency (where the improvement was the highest from 108th to 52nd in ranking).2 However, despite this, the Indian economy went through a slowdown in 2019, which was exacerbated by the covid virus, and the Reserve Bank of India (RBI) has estimated that GDP growth will be negative in 2020 and 2021.3

The covid-induced total lockdown on 24 March 2020, which was extended until 3 May 2020, has had a significant impact on the real estate sector, including:

  1. a significant reduction in demand;
  2. demands for the waiver of rents in office and retail projects;
  3. a freeze in the hospitality sector;
  4. migration leading to shortages of construction workers;
  5. supply chain disruption for construction materials; and
  6. reduced capital availability.

Institutional investment into India's real estate sector declined sharply in the January to March 2020 period, dropping 58 per cent year-on-year, and total investments in FY 2019–20 have been the lowest in four years, declining by 13 per cent to US$4,261 million from the levels seen in the previous year.4 These trends are expected to change slowly in forthcoming quarters.

Recent market activity

Significant reported activity last year included the following:

  1. The first REIT, which was launched earlier in 2019 by the global investment firm Blackstone and realty firm Embassy group, saw its share price shoot up some 34 per cent in its first six months. Blackstone was also proposing its second REIT with developer partner K Raheja Corp.5
  2. Private equity firm Warburg Pincus entered into a joint venture with Mumbai developer Runwal Group, which would have a total corpus of US$1 billion to develop shopping malls.6
  3. Bangalore-based RMZ Corp and Japan's Mitsui Fudosan entered into a US$1 billion joint venture for office spaces.7
  4. Blackstone also acquired office assets from Indiabulls group for approximately US$730 million.8
  5. Most investments have been in the commercial office space, followed by the warehousing, retail and coworking segments.9 Besides existing investors from the US, Europe, the UAE and Singapore, Japanese and South Korean investors also showed interest in the Indian real estate market in 2019 and 2020, with Japan's Mitsui, Marubeni and Sumitomo Corp having also made investments.10


1 Cyril Shroff is managing partner and Reeba Chacko and Nagavalli G are partners at Cyril Amarchand Mangaldas. Tax inputs from S R Patnaik and Mekhla Anand, and Insolvency and Bankruptcy Code, 2016 input from Lakshmi Prakash. They were assisted by Trayosha Darapuneni and Harish S, principal associates in the corporate practice.

3 Address by RBI Governor, Shaktikanta Das, on 22 May 2020.

11 The FIPB has since been abolished .

14 Protocol amending the Agreement between the Government of Republic of India and the Government of Republic of Mauritius for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains and for the encouragement of mutual trade and investment, signed on 10 May 2016.

15 Third Protocol amending the Agreement between the Government of India and the Government of Republic of Singapore for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, signed on 30 December 2016.

16 A revised Agreement between the Government of Republic of India and Government of Republic of Cyprus for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income, along with its Protocol, was signed on 18 November 2016.

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