Indian realty sees 20% decline in PE funding in H1CY23: Report

Private equity investments across the office, warehousing and residential segments in India declined 20 per cent year-on-year to $2.6 billion in the first half of CY 2023, according to a new report released by property consultancy Knight Frank India on Wednesday.

PE investors adopted a measured approach in H1 2023 owing to tightened lending standards and geopolitical uncertainty on a global scale, the report cited.

However, the sector is expected to see a rebound in the back half of the year with overall PE investments estimated to touch $5.6 billion registering a 5.3 per cent year-on-year growth, the report projected.

In H1 2023, the office sector maintained its lead bagging a 68 per cent share of overall PE investments at $1.8 billion, followed by warehousing at $555 million (21 per cent) and residential at $277 million (11 per cent). Mumbai received the highest overall investments accounting for a 48 per cent share while NCR stood second at 32 per cent and Bengaluru third at 13 per cent.

“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, Chairman & Managing Director, Knight Frank India.

PE investments in the office segment witnessed a 24 per cent y-o-y surge largely driven by a $1.4 billion-deal between Singapore’s sovereign wealth fund GIC and Brookfield India Real Estate Trust REIT, the report highlighted.

Nearly 75 per cent of investments came from Asian countries in H1 2023, as opposed to 86 per cent investment from Canada and the US in H1 2022, the report noted. This subdued investment activity from the US and Canada come on the back of increased capital cost and growing concerns of recession.

Furthermore, nearly 96 per cent of investors opted for the equity route to invest in H1 2023 versus 60 per cent in the same period last year.