PE investors keep faith in Indian realty despite global headwinds

Institutional investors have continued to pose faith in the Indian real estate sector despite the global headwinds including uncertainty over economic growth and geopolitical tensions. The rise in investment inflow is an indication of the growth opportunities as India continues to emerge as a bright spot among international markets.

Indian real estate has attracted over $2.6 billion during the first half of January-June and the momentum of investments inflow is expected to sustain and top $5 billion in 2023 led by office, warehousing and data center assets, experts said.

Office properties at 68% accounted for the largest share out of all private equity investments worth $2.6 billion and this was followed by warehousing at 21% and residential at 11% share, said Knight Frank India.


The real estate sector witnessed a total 22 transactions during the first half attracting $2.9 billion investments, shows data from JLL India. Average deal size of investments increased by 17% to $134 million as against $115 million, an aggregate of the year 2022.

"Indian economic growth in the last few quarters has been a strong reason for long-term confidence among global investors...Unlike other global gateway markets, India has consistently witnessed a steady growth momentum, which enhances investor confidence in the sector. Looking ahead, the office sector is expected to remain a favourite among investors, as it is likely to maintain its momentum in the short to mid-term," said Shishir Baijal, CMD, Knight Frank India.

According to Lata Pillai, MD & head, Capital Markets, India, JLL, investor confidence in Indian real estate is increasing steadily. The healthy response to India's first retail Real Estate Investment Trust (REIT), Nexus Select Trust indicates a positive investment environment.

"The office sector witnessed robust investments close to $2 billion surpassing the sector's 2023 numbers. The last few years have witnessed core assets changing hands between investors which is an indication of a maturing market," she added.

The first half of 2023 witnessed a significant increase in the domestic capital to 44% of the total investment, compared to 18% a year ago with the highest contribution of domestic capital in the last five years. Largest amount of investment has come from the Asia-Pacific region with 74% share of the total foreign investments, remainder was by Americas.