Indian Real Estate Sees 63% Surge in Private Equity Investments

Following a relatively subdued performance in the first quarter, the Indian real estate industry observed robust inflow of private equity (PE) investments totaling $1.92 billion in the second quarter of 2023. This noteworthy development reflects a substantial increase of 63% compared to the preceding quarter (Q1 2023) and a remarkable surge of 60% in comparison to the corresponding period last year.

During Q2, the office segment reclaimed its prominence as the favored asset category, commanding approximately 65% of the total quarterly PE investments. This resurgence was primarily driven by acquisitions of operational assets in the Delhi NCR, Mumbai, and Hyderabad regions.

According to Mr. Somy Thomas, Managing Director, Valuations and Co-Head, Capital Markets, Cushman & Wakefield, “Retail asset classes are doing mostly double-digit NOI growth on a year-over-year basis and considering the shortage of high-quality retail space, we expect rental growth to continue in the near term.”

The latest Investment report published by Cushman & Wakefield highlights that a significant portion of these investments, approximately 84%, originated from foreign investors, primarily institutions based in Singapore, Canada, and the United States.

Notably, the second quarter also marked the introduction of India's inaugural retail Real Estate Investment Authority (REIT) IPO, the Nexus Select Trust. This milestone event generated approximately $390 million through its share offering in May 2023. Furthermore, a consortium of prominent asset owners is poised to establish a new office REIT, anticipating an addition of 45 million square feet by year-end.

Statistics for the first half of 2023 (H1-2023) underline an impressive cumulative inflow of around INR 24,680 crore (equivalent to $2.99 billion), signifying a substantial 51% upswing compared to the first six months of 2022 (H1-22).