PE investment in real estate fell 17% to $5.13 billion

21 Dec 2022 CW Team

According to Knight Frank India, private equity investment in real estate decreased 17% this year to USD 5.13 billion as investors became more cautious due to geopolitical and inflationary concerns.

When compared to last year, private equity (PE) investment, both in the form of pure equity and debt, decreased in the housing, office, and retail sectors. However, it climbed in the warehouse asset sector.

According to Knight Frank data, PE investment in warehousing surged by 45% this year, from USD 1,313 million to USD 1,907 million.

PE investment in office assets decreased by 19% to USD 2,331 million this year from USD 2,882 million in 2021.

Housing-related PE inflows decreased by 50% to USD 594 million in 2022 from USD 1,187 million in 2017.

PE investment in retail assets fell 63% to USD 303 million this year from USD 817 million in 2021.

From USD 6,199 million (USD 6.2 billion) in 2021, the total amount of PE investment has decreased to USD 5,134 million (USD 5.13 billion) this year.

Knight Frank India Chairman and Managing Director Shishir Baijal stated, “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 reservations, he stated that Indian real estate offered opportunities for both domestic and international investors.

With an inflow of USD 2.33 billion this year, the office segment remained the most popular investment category, according to Baijal.

"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 anticipates that inflation in most countries will moderate and the pace of rate hikes will slow.

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

From 2011 to 2022, the Indian real estate sector attracted USD 54.8 billion in PE investment through 659 transactions, according to Knight Frank.

Apart from a drop in PE inflows due to the pandemic in 2020, PE investments in Indian real estate have remained strong in the last decade, with an average investment of USD 4.6 billion per year from 2011 to 2022.

Among India's top eight markets, Mumbai received the most PE investments, accounting for 41% of total inflows, followed by Delhi-NCR (15% share) and Bengaluru (14% share) this year.

According to Knight Frank India, private equity investment in real estate decreased 17% this year to USD 5.13 billion as investors became more cautious due to geopolitical and inflationary concerns. When compared to last year, private equity (PE) investment, both in the form of pure equity and debt, decreased in the housing, office, and retail sectors. However, it climbed in the warehouse asset sector. According to Knight Frank data, PE investment in warehousing surged by 45% this year, from USD 1,313 million to USD 1,907 million. PE investment in office assets decreased by 19% to USD 2,331 million this year from USD 2,882 million in 2021. Housing-related PE inflows decreased by 50% to USD 594 million in 2022 from USD 1,187 million in 2017. PE investment in retail assets fell 63% to USD 303 million this year from USD 817 million in 2021. From USD 6,199 million (USD 6.2 billion) in 2021, the total amount of PE investment has decreased to USD 5,134 million (USD 5.13 billion) this year. Knight Frank India Chairman and Managing Director Shishir Baijal stated, “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 reservations, he stated that Indian real estate offered opportunities for both domestic and international investors. With an inflow of USD 2.33 billion this year, the office segment remained the most popular investment category, according to Baijal. 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 anticipates that inflation in most countries will moderate and the pace of rate hikes will slow. With investors paying attention to the economy, governmental and regulatory framework, business results, and valuations, investments in India are expected to improve, he said. From 2011 to 2022, the Indian real estate sector attracted USD 54.8 billion in PE investment through 659 transactions, according to Knight Frank. Apart from a drop in PE inflows due to the pandemic in 2020, PE investments in Indian real estate have remained strong in the last decade, with an average investment of USD 4.6 billion per year from 2011 to 2022. Among India's top eight markets, Mumbai received the most PE investments, accounting for 41% of total inflows, followed by Delhi-NCR (15% share) and Bengaluru (14% share) this year. See also: Real estate PE investment up 40% in Apr-SepPE investment in Indian real estate stands at $322 million in Q3 2022