Private equity investment in real estate in India has risen by 40%. According to Knight Frank India, private equity investments in real estate increased 98% to $1.18 billion during the quarter ending March and are projected to reach $6.88 billion in 2022. It increased to USD 2.8 Billion from April to September of this fiscal year. Foreign funds make up a large part of this, especially for office assets. This article is about the future of private equity investment in real estate in India.
According to an Anarock report, Private Equity investment in real estate was $ 2 billion at the same time during the previous financial year. The demand for both commercial and residential real estate is on the rise, and institutional investors worldwide are becoming more interested in Indian real estate as a result. At the same time, the sector is changing in terms of transparency thanks to new policies, which are driving this transformation. Around 78% of all inflows during the first half of this fiscal year were made up of international investors’ investments, demonstrating their strong faith in Indian real estate.
Shobhit Agarwal, MD & CEO of Anarock Capital, which is part of real estate consultant Anarock says “Investor confidence in Indian real estate is increasing steadily as a reflection of improvement in the Indian economy and state of real estate industry.”
The entire amount of debt and equity investments made by private equity firms in 2021 was $6.2 billion, an increase of 57% from the previous year. A total of over $50 billion in private equity investments have been made in the nation’s real estate market since 2011.
Office continued to be the preferred asset class, bringing in $2.88 billion in 2021, and $732 million in the first three months of 2022. The quarter’s private equity investments went to the office sector to the tune of 62%, followed by retail, 21%, warehousing, and residential sectors.
Shishir Baijal, Chairman & Managing Director, Knight Frank India says “While investors’ appetite remained strong across various real estate asset classes in 2021, escalating global tensions emanating from Russia-Ukraine war and the influence of omicron in the early part of the year were seen inhibiting investment. The push for infrastructure spending will accelerate investments in the next 3 quarters of 2022 to levels witnessed prior to the pandemic with estimated investments touching $6.8 billion.”
Investments totaling $253 million were made in the retail sector in the first quarter, with one deal accounting for the majority of that amount. Retail assets were transacted in a total area of 1.7 million square feet during the March quarter. From Singapore’s Sovereign Wealth Fund GIC and property developer Ashwin Sheth Group, the Thane, India-based Lake Shore India Advisory, supported by the Abu Dhabi Investment Authority, acquired the Viviana Mall.
The retail industry is anticipated to see capital contributions from investment platforms that continue to be upbeat about its growth prospects, expecting retail sales buoyancy resulting from protracted pandemic stress
Lifting the COVID restrictions, improving market sentiment, and restoration of economic activity have been the main drivers of the increase in investments.
The study by Anarock Capital showed that of the USD 2.8 billion in inflow by PE firms from April to September 2022, USD 2.2 billion was in the form of pure equity and the remaining USD 2.4 billion was in the form of structured debt.
What is Private Equity?
A collection of investment firms known as private equity (PE) makes investments in or buys private companies that are not publicly traded. Another option for so-called PE funds is to take over publicly traded businesses, privatize them, and then restructure them for potential expansion in the future.
An additional approach to describe private equity is as a type of financing in which public or private enterprises receive investments from a PE fund. Typically, private equity invests in established businesses in more traditional industries in exchange for an equity stake in the corporation.
Until now, private equity funds have not always been subject to the same regulations as other market participants. However, they are typically subject to more thorough scrutiny now.
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PE is the abbreviation.
Office continued to be the preferred asset class.
Investments totaling $253 million were made in the retail sector in the first quarter.
It was office followed by retail, warehousing, and residential sectors.