Dedicated locality research platform
Dedicated locality research platform
Enter your email address and you will receive
a link to reset your password
A recent report by Savills India reveals a growing trend of private equity (PE) investment in the industry. The report highlights a significant increase in PE investment, with over USD 10.7 billion (approximately INR 843 billion) pumped into the sector across nearly 100 deals between 2021 and 2023. This translates to a transaction volume increase of over 25% annually, with investment values also rising steadily. Notably, the average deal size has remained consistent, ranging between USD 100 million and USD 120 million (approximately INR 8.3 billion - INR 9.9 billion) during this period.
Traditionally, the US and Canada were the primary sources of PE funds for Indian real estate. However, the report reveals a significant shift towards Asian investors, particularly those from Singapore, Japan, and Hong Kong. Their share of investments has surged from just 15% in 2019-2020 to a substantial 47% in 2021-2023. This growing interest from Asian investors, representing an investment increase of 32 percentage points, indicates their rising confidence in the Indian real estate market's potential.
The report further reveals that the office sector has been the biggest beneficiary of PE investment, attracting over half (51%) of the total funds, totaling approximately USD 5.5 billion (INR 433.7 billion). This is likely due to the continued demand for modern office space in key Indian cities. However, the industrial and warehousing sector is also attracting significant attention, capturing around 20% of PE investments, or roughly USD 2.14 billion (INR 168.6 billion). This trend reflects the growing importance of logistics and e-commerce in the Indian economy.
Looking ahead, the report highlights a growing trend of PE investors diversifying into land deals. This is likely a response to the limited availability of existing, high-quality assets and the potential for future development in the Indian market. The share of land transactions in overall PE investments has jumped from just 5% in 2021 to a significant 26% in 2023, with a six-fold increase in deal volume during this period. Mumbai remains the top destination for land investments, capturing over half (57%) of the total invested between 2021 and 2023, totaling approximately USD 6.1 billion (INR 477.2 billion). Tier II cities are also showing promise, attracting over USD 167 million (approximately INR 14 billion) in PE investments during the same period.
The increasing involvement of PE investors in Indian real estate, injecting over USD 10.7 billion in the last three years, is a positive sign for the industry's future. This additional source of funding can help developers unlock new projects, improve infrastructure, and cater to the evolving needs of businesses and consumers. With continued investor confidence and strategic diversification, Indian real estate is well-positioned for sustained growth in the coming years.
Propscience is India’s dedicated property news portal. We cover the latest events, news, trends, deals, new launches and more.
All our services and tools are completely free of cost and available 24X7!
