PE investments into Indian real estate hit USD934m in Q3

This is three times the investment volumes in the same period last year.

Like most major economies, India is faced with a scenario of scaled-down growth in the face of global headwinds. However, Savills says the central bank has ensured that inflation does not spiral out of control and the economy largely adheres to its growth path. 

“In early August, the RBI maintained the repo rate at 6.5% for a third consecutive time in its bimonthly policy meet thereby conveying its confidence in its ability to manage inflation. RBI followed a similar approach in October 2023 as the inflation projection for FY 2023-2024 currently stands at 5.4%, well within the tolerance zone of 2% to 6%,” the analyst adds.

Here’s more from Savills:

Despite an element of uncertainty, several key indicators continued to provide a sense of positivity. For example, retail inflation eased to 6.8% while core inflation continued to slow dropping by 0.1 percentage points to 4.8% in August 2023. 

Similarly, core sector growth registered a 14-month peak of 12.1% in August 2023 while manufacturing PMI stood at a 3-month high of 58.6 in August 2023. Further, the 6.5% GDP forecast by the RBI for FY 2023-2024, means that India continues as the fastest growing major economy. 

Drawing confidence from government efforts to build a favourable environment, investment sentiment appears to be positive and investor confidence remains intact. During Q3/2023, private equity investment inflows into the Indian real estate sector amounted to US$934 million (INR78 billion), almost three times the level recorded during Q3/2022. 

Further, the investment inflows during January-September 2023 are noted as US$2.1 billion (INR173 billion), registering a marginal increase of 2% YOY compared to the quantum recorded in the corresponding period in the previous year. 

Despite intensifying global economic recessionary concerns and a challenging geopolitical situation, PE investments in Indian real estate maintained their momentum as the sector provided favourable avenues for foreign and domestic institutional investors. 

The commercial office segment maintained the pivotal position during Q3/2023, garnering an 81% share in the overall investment pie. All the quarterly investment in the commercial segment came from foreign institutional investors and was spread across development assets in Mumbai as well as core assets in Delhi-NCR and Chennai. 

Other investments were concentrated in industrial and warehousing assets in Mumbai, Cuttack, Aurangabad, Hosur and Goa as well as residential assets in Pune and the NCR.