- USD 1.92 bn of investment activity, 63% higher than Q1
- Office captures 65% of total quarterly PE flows
- Foreign investors account for 84% of investment flows
The Indian Real Estate Sector recorded robust private equity investment of 1.92 bn USD in Q2 2023, highlighting investor confidence in the market after a marginally subdued Q1. This is 63% higher than the previous quarter (Q1-23) and 60% higher than the same period last year, according to Cushman & Wakefield’s latest Investment report.
The office segment, which had seen its share come down over the last two quarters, re-emerged as the most preferred asset class in Q2 by capturing almost 65% of the total quarterly PE flows, largely driven by operational asset acquisitions across Delhi NCR, Mumbai, and Hyderabad.
As per the findings of the report, foreign investors accounted for nearly 84% of the investment inflows driven by Singapore, Canada, and USA-based institutions. Fund-raising activity, however, was limited in Q2 with the quarter witnessing a total of USD 304 Mn in fundraising focused on the residential and L&I segment. This is expected to pick up in H2, 2023, largely driven by two major institutional players planning to focus on existing commercial asset portfolio expansion in the next few years.
Q2 also saw the listing of India’s maiden retail REIT ‘Nexus Select Trust’ which raised close to USD 390 Mn from its share sale in May 2023. With a new office REIT by a consortium of prominent asset owners, a total of 45 million Sq.ft is expected to be added by the end of the year. NDR Warehousing, based in Delhi NCR is evaluating its maiden INR 2,000 crore InvIT by listing its ~19 msf portfolio across India.
In terms of H1-2023 data, the report highlights a cumulative inflow of close to INR 246.8 Bn (USD 2.99 Bn) in the first six months of the year, which is 51% higher than H1-22. This is mainly driven by investment in the office segment and increased investments in alternate segments like L&I and data centers. Equity investment constituted about INR 203.7 bn (USD 2.47 bn) during H1-23, accounting for 87% of the total inflows.
Speaking of the developments, Somy Thomas, Managing Director, Valuations and Co Head, Capital Markets, Cushman & Wakefield commented – “Indian office markets are one of the most resilient investment classes in the real estate world with stable occupancies along with rental growth beating inflation. Retail asset classes are doing mostly double-digit NOI growth on a YOY basis and considering the shortage of high-quality retail space, we expect rental growth to continue in the near term.”
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