Comments
Private equity investment in the Indian real estate sector was down 20 per cent to $2.6 billion in the first half of 2023, according to Knight Frank India.
The drop in investments is a result of a conservative shift in investment strategies. However, overall PE investments in the real estate sector are estimated to touch $5.6 billion in 2023, a 5.3 per cent y-o-y growth.
Across the industry, the office sector, at 68 per cent accounted for the largest share of all PE investments, followed by warehousing at 21 per cent, and residential at 11 per cent.
Segment-wise investment
Data from the report show that the office sector received $1.8 billion in investments during H1 2023. The resilience of investable grade office assets supported this dominance. PE investments in the office sector experienced a y-o-y increase of 24 per cent during this time, and the growth was largely driven by a deal worth $1.4 billion between GIC and Brookfield India Real Estate Trust REIT.
The residential sector attracted $277 million during the period, and all PE investments in the segment were focused on under-construction projects, aiming for investments at an early stage for better returns. However, the warehousing segment experienced a contraction in H1 2023, with an amount of $555 million compared to $1.2 billion in H1 2022. The lack of supply of high-quality assets contributed to the slowdown in investments in the sector, the report said.
In terms of geographies, Mumbai received the highest investments, accounting for 48 per cent, NCR stood second at 32 per cent; and Bengaluru at 13 per cent. Nearly 75 per cent of investments came from Asian countries in H1 2023, in contrast to 86 per cent of investments received from Canada and the US in H1 2022.
Economic challenges
“The decline in the volume of investments over the past year was due to the economic challenges faced worldwide, leading some large economies to take drastic fiscal and monetary policy measures. Looking ahead, the office sector is expected to remain a favourite among investors, as it is likely to maintain its momentum in the short to mid-term,” said Shishir Baijal, Chairman and Managing Director of Knight Frank.
The retail sector did not see any action during this time. However, the listing of a retail REIT is expected to increase interest among investors.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.