India real estate investment volume down 38.4% to USD0.77b in Q1

Nearly 60% of all fund flows were equity investments. 

Private equity investment in India’s real estate sector declined 38.4% q-o-q to INR 57.9 bn (USD 0.77 bn) in the first quarter of 2022. According to Cushman and Wakefield, the investment volume is likely to pick up pace as some marquee transactions are likely to be executed in the coming quarters. 

“Foreign investors constituted a dominant 93.1% share in investment volume as compared to 23.7% share in the previous quarter. Equity investments held a major 59.8% share in the fund flows for Q1, unlike the previous quarter where debt investments constituted a larger share (91.3%) of investment volume,” the analyst said.

Here’s more from Cushman and Wakefield:

At a city-level, Mumbai accounted for more than half of the private equity inflows for Q1 with a 52.8% share, with ADIA-backed Lake Shore India Advisory acquiring Viviana Mall. Multi-city investments accounted for 29.3% share of the quarterly investments with the second phase of the landmark Blackstone Group – Prestige Estates transaction culminating in Q1. Delhi NCR and Chennai with respective shares of 6.0% and 4.0% in the quarter’s investments were the other cities that garnered top interest from institutional investors. 

Retail was the leading sector driving quarterly investments with a one-third share at INR 19 bn (USD 0.25 bn). The sector saw a comeback after a gap of eight quarters. Retail sector is expected to record more activity as Blackstone Group plans to list India’s maiden retail-led REIT in subsequent quarters. 

Markets being completely out of the Covid-induced mobility restrictions and reports of strong revival in mall footfalls could be reasons behind the rising focus on retail sector investments by institutional investors. Besides retail, multi-sector investments (having a mix of office, retail, hospitality) had a 29.3% share in Q1 investments. Office sector held a 18.7% share in Q1 with an INR 10.8 bn (USD 0.14 bn) investment by Brookfield Asset Management. 

Industrial segment accounted for a 7.9% share in the quarter’s investments with investments by Mapletree Logistics Trust, ESR and DMI Alternative Investment Fund acquiring land parcels in Bengaluru and Delhi NCR. The sector that is increasingly popular for greenfield investments witnessed investment inflows of INR 4.6 bn (USD 0.06 bn) during the quarter. 

The fast-emerging sector of data centres accounted for a 4% share in the overall investment volume. There is a possibility of increased focus in this asset class going forward as Union budget FY23 accredited the sector with infrastructure status. The Brookfield Asset Management – Digital Realty joint venture acquired a 10-acres land parcel in Ambattur, Chennai under the JV’s plan to develop, own and operate data centres in India. 

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