Private equity (PE) investments in Indian real estate surged by 15 per cent year-on-year (Y-o-Y) from $2.6 billion in the first half of 2023 to $3 billion in the first half of 2024, according to a report by Knight Frank India, a real estate advisory firm.
The warehousing sector dominated with 52 per cent of total PE investments, backed by a single deal of $1.5 billion between Reliance Retail, Abu Dhabi Investment Authority (ADIA), and Kohlberg Kravis Roberts & Co. (KKR). This was followed by residential at 29 per cent and office at 20 per cent.
“Indian commercial real estate continues to thrive due to factors like return to work, rising office absorption, and strengthening rental values,” said Shishir Baijal, chairman and managing director, Knight Frank India, in the report. “Looking ahead, we expect some easing of conditions in the western world which will bring back investments from global players. This, combined with India’s growth trends, is expected to lead to increased investment activity from global funds.”
Mumbai led the investment landscape with $1.701 billion, followed by Bengaluru and Hyderabad.
The warehousing sector accounted for 88 per cent of the total PE investments in Mumbai, amounting to $1.5 billion, while the residential sector contributed 12 per cent, amounting to $201 million.
Warehousing investments rose 176 per cent Y-o-Y to $1.532 billion, driven by e-commerce and logistics.
Residential investments increased by 209 per cent Y-o-Y to $854 million, with Bengaluru leading at $403 million.
While the office sector saw a 67 per cent decline at $579 million in investments during the period, the report noted that demand for Grade A office spaces in prime locations remains strong, driven by Global Capability Centres (GCCs) and India-facing businesses.
Hyderabad, Bengaluru, and the National Capital Region (NCR) emerged as leading destinations for office investments in the first half of 2024.
The report also stated the growing influence of Alternative Investment Funds (AIFs), which have raised $5.3 billion since January 2021, with $2 billion yet to be deployed.
First Published: Jul 17 2024 | 5:02 PM IST
