PE investments in Indian real estate at $3.9 billion, a 14% YoY increase: Savills India

Source: Hindustan Times

Office assets took the lead with 65% share in the total PE investments, followed by housing at 15%. Mumbai received the largest share of commercial investments.

New Delhi: Private equity investments inflows into the Indian real estate sector stood at $3.9 billion at the end of 2023, registering a 14% increase YoY. Foreign institutional investors retained their status as the primary contributors to investment activity, holding a 75% share, according to the latest data by Savills India, a global property consulting firm.

In terms of segments, office assets took the lead with a 65% share in the total PE investments, followed by residential at 15%, and industrial and warehousing at 10%. Mumbai received the largest proportion of commercial office investments, the report said.

Despite geopolitical challenges, high global inflation and economic recessionary concerns, private equity investments maintained the momentum, offering favourable opportunities for both global and domestic institutional investors.

Savills India expects $3.5 billion to $4.0 billion of private equity investments in real estate in 2024. Amidst limited investable grade assets, the office segment might see muted investments, while alternative sectors like life sciences, data centres and student housing are poised for prominence, it said.

The investor base is anticipated to broaden, especially from Asian institutional investors. In 2023, Japanese investors notably intensified their commitments in real estate, from direct purchases to forming joint ventures.

“Despite the global geopolitical and economic turmoil in the post-pandemic world, India has established itself as the strongest destination in emerging markets for real estate investors. This is a result of the inherent strength of India's demographics and economic potential, boosted by a slew of progressive regulatory changes across sectors, especially in real estate, as witnessed in record residential sales and office leasing," said Diwakar Rana, Managing Director, Capital Markets, Savills India.