PE investments in realty dip 25% in 2022 on inflation, interest rate spike

In terms of average transaction size, the sector saw average deals of $191 million in 9M 2022, up 53% over $125 mn in the same period in 2021

Rising inflation, higher interest rates, and geopolitical unrest led to a spike in volatility and a slowdown in private equity (PE) transactions in 2022. The Indian real estate sector received PE investments amounting to $4.2 billion across the office, warehousing, residential and retail sectors in the first nine months (9M) of 2022, according to Knight frank’s latest report.

As most of the segments observed a drop in investments, PE investments declined (YoY) by 25 per cent from $5.6 billion registered in the first nine months of 2021.

In terms of average transaction size, the sector saw average deals of $191 million in 9M 2022, up 53 per cent over the average deal size of $125 million in the same period in the previous year. The first nine months of this year recorded 22 transactions, compared to 45 transactions at the same time in the previous year.

The report says the office sector remains the frontrunner during 9M 2022, cornering 55 per cent of PE investments, followed by warehousing (29 per cent), residential (9 per cent), and retail (7 per cent).