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According to a report published by Knight Frank India, the total number of private equity investments in real estate in 2022 totalled to USD 5.13 billion, indicating a dip of 17 per cent from the USD 5.20 billion registered in 2021. The office sector remained on top, garnering almost 45 per cent while warehousing came in second with a share of 37 per cent. Residential attributed to 12 per cent and retail to the balance 6 per cent. Mumbai led in cities’ race with accounting for 41 per cent of the total investments followed by Delhi NCR at 15 percent and Bengaluru in third place with 14 per cent.
Although the real estate sector has seen a healthy infusion of private equity led by commercial real estate this year, according to a report published by Knight Frank, the total number of investments for 2022 totalled to USD 5.13 billion, indicating a dip of 17 per cent from the USD 5.20 billion registered in 2021. These investments have been made across residential, retail, warehousing, and office sectors. Experts believe rising interest rates, geopolitical instability and high inflation are some of the contributing factors to slowing pace of these investments. Advertisement
The office sector remained on top, garnering almost 45 percent of the total private equity investments this year while warehousing came in second with a share of 37 percent. Residential attributed to 12 per cent and retail to the balance 6 per cent. Mumbai led in cities’ race with accounting for 41 per cent of the total investments followed by Delhi NCR at 15 percent and Bengaluru in third place with 14 per cent.
Although commercial real estate appears to the front runner, this year it recorded a decline in investments of 19 per cent when compared to the same period last year. More than 65 per cent of the investments made were into ready assets while 34 per cent were made in new and under construction development indicating a cautious attitude for investors. The warehousing segment had a robust YoY growth of 45 per cent with investments totalling to upwards of 1.9 billion for 2022. Experts believe demand will continue to grow owing to rapidly increasing need for last mile delivers and logistics.
Private equity in retail were confined to only two deals that took place this year. The segment has witnessed a 63 per cent YoY decline largely attributed to concerns of the potential effect high inflation is likely to have on the sector. The residential sector derived over 85 per cent of its private equity investments from foreign players.
Private equity exits during the year stood at USD 822 million, down by 41 per cent from USD 1.39 billion in 2021. The average deal size of exits grew significantly faster than the exit volumes, indicating higher valuations and growing appetite of investors for high value deals. Exits via Public market sale also grew to an average size of USD 164 million in 2022 from USD 155 million in 2021.
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