Private equity inflows into realty increase 20%


Private equity investment in the Indian real estate market reached $4.9 billion in 2022, showing a 20% increase year-over-year, despite facing challenges such as high interest rates, inflation, and economic concerns.

In 2022, assets that generated income received the lion’s share of funding in the sector. The residential, retail, and hospitality industries also attracted significant funding, as large transactions took place during the year and are expected to see continued growth in the coming years.

“The investments in Indian real estate have been consistent for the past few years and hence have the potential to grow due to the structural change in demand for capital,” said Piyush Gupta, managing director, capital markets and investment services, Colliers India. “Performance credit, special situations, portfolio acquisitions, asset reconstruction, and related structures have been growing and are likely to attract more investments.”

According to a report, the office segment will continue to lead in 2022, accounting for 41% of total funding. The inflows into the sector increased by 50% year-over-year, driven by several significant deals.

Notable investments in this segment during the year included Abu Dhabi Investment Authority (ADIA) investing $235 million in Mindspace REIT, Kotak Investment Advisor-ADIA investing $195.2 million in Embassy REIT and Brookfield buying IL&FS office assets for $142 million. This reflects a trend among global and domestic funds, who are looking to build portfolios of properties that they can bundle as REITs.

Experts predict that investors will continue to show interest in both greenfield and ready-to-move assets. Most of the deals in the office sector are likely to be led by global investors, who are seeking assets that generate income.

In 2022, global fund CapitaLand expanded its portfolio across all segments, from business parks to data centres and warehousing to industrial parks.

“We will continue to seize attractive investment opportunities to strengthen and diversify our portfolio in the country, riding on macroeconomic trends of urbanisation, digitalisation, and the exponential growth in the IT services and fintech sectors,” said Sanjeev Dasgupta, CEO, CapitaLand India Trust (CLINT).

In 2022, global investors continued to play a significant role in funding activities and had a higher level of involvement in entity-led deals. Domestic investors also increased their presence in the market, with their share of investment inflows surpassing the previous year’s share. They accounted for 22% of total inflows.

Residential assets also remained a popular choice among domestic investors.

“Office markets are echo bubbles where marginal decline is always punctuated by big rebound. Hence a much stronger thesis for PE investments,” said Quaiser Parvez, CEO, Nucleus Office Parks. “From an investment perspective as well, commercial office spaces have provided the most favourable avenue for PE due to reasons such as limited grade A supply with institutional ownership, larger capital deployment for ready-made operational assets, and a better risk-reward ratio.”

According to experts, the year 2023 is expected to witness improvement in the capital environment, with both domestic and global funds continuing to invest in the Indian real estate sector.



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