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The real estate industry in India has been attracting institutional investors across the globe. The appetite of these investors keeps growing, as the developers continue to launch new projects. With the real estate industry significantly benefitting from increased transparency in recent years, these investors now have more confidence to channel their funds.
In the first quarter of 2022, the real estate sector witnessed a 98% increment in private equity investments, as the amount soared to $1.18 billion. In 2022, this is likely to reach $6.88 billion, as per experts.
The total private equity investment in 2021 including debt and equity was around $6.2 billion. Compared to 2020, this was 57% higher. The country’s real estate sector has got cumulative private equity more than $50 billion since 2011. 62% of the private equity investments went to the office sector during the mentioned period. Other segments like retail followed suit, with 21% and 10%, respectively. Around 6% of the investments came to the residential sector.
In 2021, the appetite of the investors was strong in different asset classes. There were tensions on various fronts, like the war between Russia and Ukraine, and the impact of the pandemic. However, the real estate industry has moved forward, and investors hope for the best in the industry.
In 2021, there were 14 deals in the real estate segment, which attracted investments around $2.88 billion. At 35.4 million sq ft, the transactable area looked massive. For new development and construction assets, around 68% of the investments were necessary. This was around 86% back in 2016. The reason for this rise is the lack of transactable and mature assets in the office market in India. Hyderabad and Bengaluru were the leaders in the investment scenario. There were development stage transactions associated with the main global funds.
The overall transaction of office assets in the March quarter were around 36.9 million sq ft. There were some big deals between Middle East sovereign fund Abu Dhabi Investment Authority (ADIA) and Mindspace REIT. This increment in the transacted area shows that the investors are willing to channel their funds for larger spaces. With the industry gradually consolidating in the next few quarters, the industry is likely to get further boost.
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