Private equity investment flows into the Indian real estate sector stood at Rs 56 billion in the second quarter of 2022. Commercial office assets continued to claim the lion’s share of the PE investment during the quarter with majority of the quarterly investments coming in from foreign institutional investors and concentrated in core office assets across Mumbai, Chennai and the NCR, according to the latest data by Savills India, a global property consulting firm.
The current macro-economic situation influenced in part by the global tensions, commodity constraints, resultant inflationary pressures and monetary tightening are yet to impact the real estate investment markets.
Due to the declining supply of structured credit into residential real estate, the mainstay of PE transactions has been leased office purchase which are high in volume and make the trend lumpier in certain quarters as is also evinced in the 32 percent on-quarter decline, the report said.
India’s life sciences sector holds huge potential for attracting PE funds in the current decade. This is owing to the availability of a large talent pool at significantly competitive cost making India a compelling destination for global research & development (R&D) and manufacturing.
Betting big on this trend, global investment firm called Actis has invested $ 200 million in Rx Propellant which is involved in development and marketing of life sciences real estate projects across Hyderabad and Bengaluru.
“Private equity investment inflows into the Indian real estate sector have been strong in the yield asset classes like office, warehousing and data centres. Life sciences is another sector which will emerge as a consolidated asset class in the coming years. The uptake in office leasing and steady performance of REITs further underpins the strength of this sector. We will also witness more global investor participation in the housing sector which will fill up the void created post the October 2018 crises,” said Diwakar Rana, Managing Director, Capital Markets, Savills India.
Arvind Nandan, Managing Director, Research and Consulting, Savills India said, "Similar to Q1 2022, Commercial office assets remain the front runner garnering a major share of the investment pie. PE investment in the life sciences research and development real estate has picked up momentum since 2021 and we expect this sector to continue to grow aided by government policies, competitive costs, and growing talent pool among other factors."
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