Private equity inflow into the real estate sector has surged by 51% to reach Rs 24,680 crore during the initial half of this year, according to real estate consulting firm Cushman & Wakefield. The firm reported that in the April-June period alone, private equity investments totaled Rs 15,850 crore (approximately USD 1.92 billion), marking a substantial 63% increase from the previous quarter and a significant 60% surge from the same period last year.
Cushman & Wakefield highlighted that the first half of 2023 (January-June) observed a cumulative inflow of nearly Rs 24,680 crore (around USD 2.99 billion), representing a remarkable 51% rise compared to H1-22. This growth was primarily attributed to investments in the office segment, as well as increased funding in alternative sectors such as logistics, industrial properties, and data centers.
The inflow of equity investments constituted a significant 87% of the total funds received. Somy Thomas, the Managing Director of Valuations and Co Head of Capital Markets at Cushman & Wakefield, emphasized the resilience of Indian office markets as an attractive investment class within the real estate industry. These markets have showcased stable occupancy rates coupled with rental growth that surpasses inflation.
Thomas added, “The retail asset classes are achieving impressive double-digit Net Operating Income (NOI) growth on a year-over-year basis. Given the shortage of high-quality retail spaces, we anticipate continued rental growth in the near future.”
Cushman & Wakefield also pointed out notable developments in the market, such as the listing of India’s first retail Real Estate Investment Trust (REIT), Nexus Select Trust, during the June quarter. Additionally, a new office REIT, formed by a consortium of prominent asset owners, is projected to contribute a total of 45 million square feet by the year’s end. NDR Warehousing, located in Delhi National Capital Region (NCR), is in the process of evaluating its maiden Rs 2,000 crore InvIT (Infrastructure Investment Trust) by listing its extensive 19 million square feet portfolio across India.
These indicators underscore the continued growth and evolving landscape of the Indian real estate sector as it attracts increasing private equity investments, driven by various segments including office spaces, logistics, and data centers.