– Commercial Real Estate (CRE) witnessed USD 4.7 billion of investment in 2018. CBRE’s Capital Markets team executed transactions worth over USD 2 billion
– Mumbai dominated the overall industry with over 40% share of transactions
CBRE South Asia Pvt. Ltd, India’s leading real estate consulting firm today announced details of the business volume generated by its Capital Markets team and established itself as the number one team in its domain with a 50% market share.
With a comprehensive suite of services such as Capital Raising, Land Services including land sales, joint developments and development management agreements; Core Asset Sales, HNI and Family Office Advisory and Advisory to Fund Portfolios, the Capital Markets team helped its clients through a range of transactions such as Investment Sales, Foreign Investment (FDI), Structured Debt, Construction Financing and LRDs, Equity Placement, Core Asset Sales, etc. Of a total investment of USD 4.7 billion in Commercial Real Estate (CRE) in 2018, transactions worth over USD 2 billion were executed by CBRE’s Capital Markets team.
Commenting on this achievement Mr. Anshuman Magazine, Chairman and Chief Executive Officer (India, South-East Asia, Middle East and Africa), CBRE said, “The Capital Markets team has successfully positioned itself as an integrated capital solutions provider- offering Capital Raising, Land, HNI Advisory and Core Office Acquisition/Divestment Services. The business reached an all-time high in 2018 and reinforced its number one position for Land and Capital Markets for the third consecutive year in India.”
Talking about the overall performance of Capital Markets in 2018, Gaurav Kumar, MD & Co-Head Capital Markets, CBRE said, “The previous year also marked our expansion in key geographies in the country. We successfully executed some key transactions which helped us strengthen CBRE’s leadership position in this domain.”
The Capital Markets team has significantly contributed to the industry’s growth by arranging crucial capital requirements and has successfully positioned itself as a one-stop solution for all capital and investment needs of the commercial real estate industry.
“2018 was a very successful year for CBRE; our growth has maintained a consistent positive trend and Capital Markets has significantly contributed towards it. We foresee strong growth in the coming years as well,” said Nikhil Bhatia, MD & Co-Head Capital Markets, CBRE.
The Capital Markets team in 2018 advised on some marquee real estate investment advisory deals in India and succeeded in maintaining its number one position.
Speaking about the performance of the real estate industry in the country, Bhatia said, “Investment momentum for the overall real estate sector is expected to witness an up-tick from previous years. CBRE’s expertise in providing advice, qualitative and quantitative analysis and exceptional execution capabilities for alternative capital solutions for corporate owned and occupied real estate is a push towards these investments.”
Speaking about the expected trends among capital providers in 2019, Kumar said, “The present year is expected to see an increase in institutional equity investments in office and retail developments, boutique transactions in hospitality and sustained activity inland acquisitions and land JDAs and JVs.”
He further added that increasing focus on due diligence in the market will lead to improved loan quality, but may result in rising costs as well.
Some key trends to be witnessed in Capital Markets in 2019:
– Consolidation amongst NBFCs – The NBFC market in India is currently witnessing an overcrowding situation. In the current situation of cautious funding exposure towards NBFCs, the larger ones are expected to manage their liabilities by tapping public issues, while the smaller ones fill find it a challenge to seek an alternate source of funding.
– Loan Quality to Improve – With RBI being aggressive with cancelling licenses of non-compliant NBFCs (around 4500 NBFCs have had their licenses cancelled till October 2018), it is eventually going to result in a clean-up, ensuring availability of capital for quality assets.
– Due diligence to come in sharper focus – Investors are expected to be selective in their investment, with core, Grade A assets remaining as favoured investment.
– Shift towards core assets and LRDs – As fresh disbursements are slowing down and caution looms around new assets and land, assets that are backed by some type of collateral, as well as score assets, are likely to be in greater focus. It largely implies that there is likely to be greater focus on LRDs and core assets while financing/refinancing opportunities with existing partners and land deals are expected to be slow.
– REIT becoming a reality – As the sector gets more organized, HNIs and NRIs investors are realizing that instead of taking on the pain of directly buying, managing and maintaining commercial properties, they can also participate through a REIT.
– The yield conundrum – On the backdrop of increased demand for the dollar, rising crude oil prices and liquidity issues has resulted in 10-year bond yield breaching the psychological 8 % mark during 2018. On the other hand, prime yield in sectors such as office and retail are also around the 8.0-8.5 % ballpark, owing to marginal growth in rents and an increase in capital values.
2018 In Graphs: