Private equity investment in Indian real estate down 17% to $5.13bn

In office assets, PE investment dipped 19% to $2,331m this year from $2,882m in 2021, while PE inflows were down 50% in the housing segment to $594m in 2022 from $1,187m last year.

Private equity investment in Indian real estate fell 17% this year to $5.13bn as investors turned cautious amid geopolitical and inflationary concerns, according to Knight Frank India.

Private equity investment, in both pure equity and debt form, declined in housing, office and retail segments during 2022, whereas it increased in warehousing assets when compared with last year.

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As per the Knight Frank data, PE investment in warehousing increased 45% to $1,907m this year from $1,313m last year.

In office assets, PE investment dipped 19% to $2,331m this year from $2,882m in 2021.

PE inflows were down 50% in the housing segment to $594m in 2022 from $1,187m last year.

In retail assets as well, PE investment declined 63% to $303m this year from $817m in 2021.

Overall, PE investment has fallen to $5,134m ($5.13bn) this year from $6,199m ($6.2bn) in 2021.

Knight Frank India Chairman and Managing Director Shishir Baijal said, “The investment climate in India, moderated in 2022 as investors grew more cautious in response to escalating international tensions and concerns about rising inflation and interest rates”.

Despite these concerns, he said the Indian real estate provided avenue for both domestic and global investors. Baijal noted that the office segment remained the most popular investment category with an inflow of $2.33bn this year. “The warehousing segment continued to observe rise in interest amongst PE investors supported by the strong demand from manufacturing, e-commerce, and third-party logistics occupiers,” he said.

On the outlook for next year, Baijal expects that inflation for most of the nations and the pace of rate hikes will moderate.

“With investors paying attention to the economy, governmental and regulatory framework, business results, and valuations, investments in India are expected to improve,” he said.

Knight Frank further highlighted that the Indian real estate sector has attracted PE investment worth $54.8bn through 659 deals from 2011 to 2022. Apart from the slump in PE inflow during 2020 because of the pandemic, PE investments in the Indian real estate remained strong in the last decade, with average investment of $4.6bn per year from 2011 to 2022.

Across top eight markets in India, Mumbai received the highest PE investments, accounting for 41% of the total inflow, followed by Delhi-NCR with 15% share and Bengaluru with 14% share during this year.

Source: Realty.com

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