Real estate private equity investment fell 17% to $5.13 billion.

NEW DELHI — According to Knight Frank India, private equity real estate investment fell 17 % this year to USD 5.13 billion as investors became cautious amid geopolitical and inflationary concerns.

Private equity (PE) investment, in both pure equity and debt form, fell in the housing, office, and retail segments in 2022, while it increased in warehousing assets.

As per the Knight Frank data, PE investment in warehousing increased 45 percent to USD 1,907 million this year from USD 1,313 million last year.

PE investment in office assets fell 19% this year to USD 2,331 million, down from USD 2,882 million in 2021. PE inflows were down 50 percent in the housing segment to USD 594 million in 2022 from USD 1,187 million last year. PE investment in retail assets fell 63 percent this year, to USD 303 million, from USD 817 million in 2021.

Overall, PE investment has fallen to USD 5, .134 million (USD 5.13 billion) this year from USD 6,199 million (USD 6.2 billion) in 2021.

“The investment climate in India moderated in 2022 as investors became more cautious in responding to escalating international tensions and worries about rising inflation and interest rates,” said Shishir Baijal, Chairman and Managing Director of Knight Frank India.

Despite these reservations, he stated that Indian real estate offered opportunities for both domestic and international investors. With an inflow of USD 2.33 billion this year, the office segment remained the most popular investment category, according to Baijal.

“The warehousing segment has proceeded to see a rise in interest from private equity investors, driven by strong demand from manufacturing, e-commerce, and third-party logistics occupiers,” he said.

On the viewpoint for next year, Baijal anticipates that inflation in most countries will moderate and the pace of raising rates will slow.

“Investments in India are expected to improve as investors focus on the economy, regulatory and governance framework, profitability, and valuations,” he said. From 2011 to 2022, the Indian real estate sector attracted USD 54.8 billion in PE investment through 659 transactions, according to Knight Frank.

Apart from the slump in PE inflow during 2020 because of the pandemic, PE investments in Indian real estate remained strong in the last decade, with an average investment of USD 4.6 billion per year from 2011 to 2022.

Across the top eight markets in India, Mumbai received the highest PE investments, accounting for 41 percent of the total inflow, followed by Delhi-NCR with a 15 percent share and Bengaluru with a 14 percent share during this year.