The realty sector is back on the rails recovering from the pandemic situation. However, it faced upheavals again and yet to recover fully from the market forces. High rate of inflation, huge increase in lending rates, unsettled political conditions prevailed all over the globe are being blamed for the present crisis. In 2022, the private equity investments to the sector are put at $ 5.1 billion in 2022, which is down by 17 per cent compared to the investments attracted last year, the report said.
The first nine months of 2021 attracted $ 5.6 billion. However, this year, there was a decline in attracting investments to all divisions. This is attributed to growing inflation, high lending rates and prevailing political situation among other things. The office space sector share in attracting private equity investments in 2022 is put at 45 per cent, followed by ware housing section (37%), residential sector (12%), and retail sector (6%). Mumbai’s share of total investments is 41 per cent, followed by Delhi (15%) and Bangalore (14%), the investments in residential sector have been dropped by at least 50%.
The residential sector attracted $ 594 million of private equity investments in 2022. However, the investments dropped by at least 50% this year compared to the flow of investments to this sector last year. In 2021, this sector attracted $ 1187 million in the first nine months. The flow of investments during 2020 at the height of the pandemic situation was $ 1187 million, the lowest ever flow of investments. Investors are wary of making investments because of the inflation and increasing rate of interest on loans. Because of the reason, there was erosion in private equity investments. In residential sector, majority of the private equity investments (87%) have been sources through overseas investors.
The office space sector continued its sway. This sector attracted 2.3 million dollars investments in 2022, 19% less than what it attracted in 2021. In this sector, 66% of the investments are done on ready to move properties while 34% of the investments are made in properties under construction. Mumbai occupied the first place attracting $ 6131 million of private equity investments in office space sector, followed by Bangalore ($ 3311 millions) and Delhi (US$ 2081 million)
The flow of investments to retail sector has come down drastically. This year, the retail sector could attract investments of only $ 303 million, 63 per cent down from the flow of investments to this sector last year. The first three quarters of 2021 saw flow of investments to the tune of $ 817 million. Of the total investments, 31 per cent is made on new properties, while 12 % of the investments are made on under construction properties, while 44 % of the investments are made on ready to move properties. Mumbai occupied first place attracting $ 1664 million of investments, followed by Bangalore with $ 512 million, Pune with $ 483 million, Chandigarh $ 267 million and Hyderabad $197 million. Growing inflation, high lending rates, geo political tensions have affected the flow of private equity investments.
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