PE inflow in Indian real estate dips 44% YoY in 2023

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Private equity inflows into the Indian real estate sector fell 44 per cent in 2023 to $3 billion, as global investors exercised caution, said a report by property consultant Knight Frank India.

PE investments in real estate are on a downtrend since 2021, the lowest in eight years with near record low deals. Only 23 deals were struck during the year, with the lowest ever being during the pandemic year 2020 at 20, although the amount raised was higher at around $4 billion.

“Global geopolitical uncertainties and high interest rate environment with multiple rate hikes from US Federal Reserve and Central Bank of Canada have curbed investment activities from US and Canada, leading to significant reduction,” said the report. Over half of the inflows were from PE investors in Singapore.

Most of the inflows were in the office sector, following by warehousing and residential. There were no PE deals in the retail sector.

Yet, foreign inflows dominated investments during the year with domestic investment lagging.

“We have also witnessed a rise in interest from Asian private equity players in the recent past. This, particularly amid the impact on investments from western countries, could signal a positive shift for the Indian PE market,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

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