Private Equity (PE) investments in the Indian real estate sector have surged. In the first six months of this year, $3 billion (approximately Rs 25,000 crores) were invested in Indian real estate. This represents a 15% increase compared to the investments received during the same period last year. Knight Frank, a real estate consulting firm, provided these details. Among the total PE investments, the warehousing sector holds the largest share with 52%, followed by the residential sector with 29%, and the office sector with 20%.
Although the residential sector ranks second in terms of PE investment share, it has seen a significant increase this year. Investments in the residential sector grew by 209% to $854 million in the first six months of this year, compared to $277 million in the same period last year. Historically, until 2018, the majority of PE investments were concentrated in the residential sector, but this trend is now shifting. PE firms are also showing interest in companies involved in building office spaces.
With the rapid expansion of e-commerce companies in the country, the demand for warehouses has increased, leading PE firms to focus on the warehousing sector. Consequently, in the first half of this year, investments in this sector rose by 176% to $1,532 million (approximately Rs 12,700 crores), compared to $555 million in the first six months of 2023.
Regarding Hyderabad, in the first half of this year, real estate firms in the city received $357 million (approximately Rs 3,000 crores) in investments, accounting for 12% of the total PE investments. Mumbai led with $1,702 million in investments, while Bengaluru secured the second position with $581 million. Delhi, Pune, and Chennai follow Hyderabad in the rankings.
Shishir Baijal, Chairman and Managing Director of Knight Frank India, noted that India has become favourable for investments due to economic stability and growth over the past decade. Consequently, PE firms are increasing their investments in the real estate sector in our country. The demand for office spaces has risen as IT employees return to offices, and increased economic development has led to higher average incomes, boosting demand for residential properties.
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