Mumbai: The Indian real estate market has won back favour among foreign investors to become one of the most preferred destinations in the Asia Pacific, according to a report by PricewaterhouseCoopers (PwC) India.

Overseas funds accounted for more than 50% of all investment activity in India in the last one year, compared with just 26% for the whole of 2013, the consultancy firm said in a report titled Emerging Trends in Real Estate Asia Pacific 2016 released on Wednesday.

“Flows of foreign capital to India began increasing dramatically at the end of 2014, with the amount invested growing almost 200% year-on-year by the middle of 2015," the report said, citing data by Real Capital Analytics that provides information on commercial property.

PwC attributed the growing interest among foreign investors into the Indian real estate market to some of the liberalization measures adopted by the government in the recent past.

For instance, reducing the minimum size of built-up areas in foreign direct investment (FDI)-linked real estate projects to 20,000 sq. m from its earlier requirement of 50,000 sq. m has led to “increasing confidence among institutional investors they can find an exit", it said.

“From a deal structure perspective, while mezzanine financing continues, a shift in the favour of equity structures has occurred, especially in big-ticket transactions in commercial assets such as business parks and IT parks," said Abhishek Goenka, partner, PwC India.

Foreign private equity funds are now some of the biggest corporate real estate owners in India, after starting from scratch in 2011-12, the report pointed out.

Among the Indian cities, Bengaluru has emerged as the most preferred real estate investment destination, overtaking Mumbai and New Delhi in the previous years.

The report attributes the surge in Bengaluru’s rankings to its technology industry and the availability of a large pool of skilled labour that is necessary to ramp up venture capital-backed start-ups.

A huge amount of upcoming supply of commercial office inventory in Bengaluru is not perceived to be a cause of concern, as it is expected to be matched by an equally high absorption rate, the report said.