No big impact of Brexit on PE flows into Indian realty: JLL

Singapore: Britain's decision to leave the European Union will not have much impact on private equity (PE) investments in Indian property market, said Anuj Puri, Chairman and Country Head of real estate services firm JLL, on Monday. "Out of total overseas PE investments into Indian realty, UK accounts for just $500 million (about two per cent) while the whole of Europe (including UK) accounts for $1.9 billion (about eight per cent). Europe-based funds have only a small influence on FDI in realty," said Puri. "Brexit will not make big impact on PE flows into Indian realty. It is possible that money from UK and from rest of Europe gets invested in Indian realty as FDI (Foreign Direct investment) through PE funds headquartered in the US and Asia Pacific; both categories have invested heavily in Indian realty," he said. According to experts, the Brexit decision could bring short-term opportunities for international investors, although market sentiment will remain cautious. In the Asia Pacific, local occupiers of property and multinational companies serving domestic economies will help to insulate the region from volatility. After Brexit, the markets are volatile and the value of the pound has declined sharply. With considerable uncertainly and no real precedent, Asia Pacific real estate investors and corporate occupiers are looking to mitigate risk. "The repercussions are being felt around the globe and we are likely to see a temporary slowdown in demand from Asian occupiers with operations in the UK. However, in the long term, once clarity emerges about the UK's exit negotiations, we expect a resumption in confidence," said JLL's Asia Pacific CEO Anthony Couse. For property markets, there would be a correction but that should be followed by an upturn as opportunities re-emerge in core markets and the benefits of a weaker sterling are recognised, he said. As the political and economic situation in the UK continues to unfold, most Asia Pacific investors and occupiers will take time to digest the implications before taking medium to long-term decisions, he said. According to Alistair Meadows, head of JLL's International Capital Group, Asia Pacific, there remains a substantial weight of capital ready to be deployed from Asia into international investments.  The short-term effect of Brexit is likely to be that this Asian capital will potentially seek opportunities closer to home, in markets that are comparable in transparency to London, such as Sydney. However, for long-term institutional Asian investors, London will most likely continue in its position as one of the world's foremost investment destinations, Meadows said.