Private equity (PE) investments in India's real estate sector surged by 51% year-on-year to reach Rs 24,680 crore ($2.99 billion) in the first half of 2023, according to Cushman & Wakefield. The second quarter alone saw a 63% increase in PE investments, reaching Rs 15,850 crore ($1.92 billion), driven by a shift towards office spaces and diversification into areas like logistics, industrial zones, and data centres. Equity investments comprised 87% of total inflows, with stable office occupancy rates and strong rental growth in retail assets.
Real estate investments have seen a robust rise in 2023, particularly in the private equity (PE) sector. According to Cushman & Wakefield, there was a significant 51% year-on-year increase, amounting to Rs 24,680 crore ($2.99 billion) in the first half of 2023. This growth outpaces the figures from the previous year and indicates a vibrant real estate market.
During the second quarter of the year – between April and June – PE investments surged to Rs 15,850 crore ($1.92 billion). This is a 63% escalation compared to the first quarter, and a noteworthy 60% jump compared to the same timeframe in the preceding year.
A considerable factor behind this upswing has been the investment shift towards the office segment. However, there’s also a growing trend of diversifying investments, with increasing funds channelling into alternate areas like logistics & industrial zones, as well as data centres.
Breaking down the inflows, equity investment represented a dominant 87% of the total. Indian offices have continued to attract a steady demand as the offer stable occupancy rates while providing healthy rentals that surpass inflation. Retail assets also impressed this half, with most showing double-digit Net Operating Income (NOI) growth on a year-on-year basis.
June 2023 was a notable month for the Indian real estate market as it welcomed the debut of India's first retail REIT - Nexus Select Trust. The report also hinted at further expansions in the REIT space. By year-end, the country can expect the addition of 45 million square feet, thanks to a new office REIT by a coalition of leading asset proprietors. Additionally, NDR Warehousing, a Delhi NCR-based firm, is contemplating a debut InvIT, planning to list its vast 19 million square feet portfolio spanning across India.
In conclusion, the first half of 2023 marked an encouraging period for the real estate sector, especially in private equity investments. With diversified investment avenues and the initiation of new trusts, the future of the Indian real estate market looks promising and expansive.
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