PE funding in realty drops 67%

The real estate sector witnessed a 67 per cent drop in private equity investments in the first quarter of the calendar year.

The Indian real estate received total investments of $1.18 billion in Q1 2022, compared to $3.7 billion received in 2021, as per the data from Knight Frank India.

In the first quarter of 2022, the effect of Omicron, concerns of interest rate increase and rising global tensions caused by the ongoing conflict, hampered investment flow.

Private equity investments have been seeing a slowdown across sectors since October 2021. Hence, on a quarter-on-quarter basis, investments showed a growth of 98 per cent in the March quarter when compared to $597 million in Q4 of 2021.

In the calendar year 2021, total private equity investment received by the sector stood at $6.19 billion.

Knight Frank India expects private equity investments in the sector to still grow by 11 per cent in 2022 to $6.9 billion.

"PE investments in India have been found to be largely correlated to government investment, currency movement, inflation, interest rate, and office supply in recent years.,” it said.

"As a result of the improving economic outlook and our evaluation of the influence of the variables on investments, we project total private equity investments in India to rise by 11 per cent to $6.9 billion in 2022. While there are uncertainties around Covid-19 and the rate at which interest rates are hiked, these concerns have been largely discounted, posing minimum threat to the investment climate," said Shishir Baijal, chairman & managing director, Knight Frank India.