Steady global investor interest boosts India’s retail sector: report

The sector enjoyed robust growth from improved consumer confidence.

Global investors’ unabated interest in Indian retail developments, coupled with confidence in domestic demand, has augured well in attracting huge investments in the South Asian country’s retail sector, according to a report from Savills.

Residential and retail sectors have witnessed robust growth, riding high on end-user demand and an overall improved sentiment for buying post the pandemic, the report noted. In particular, the retail sector saw its largest acquisition in India in the last five years.

In 2022, private equity investment inflow into the Indian real estate sector was recorded as $3.4b (INR271b), at par with the quantum registered in 2021. During Q4 of the same year, the investment inflows amounted to $1.4b (INR110b), registering four times the quantum witnessed in Q3, Savills said.

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The report noted that persisting geopolitical challenges amidst the ongoing Russia-Ukraine war, high global inflation, a fresh COVID-wave outbreak and lockdown in China have slowed down the post-pandemic economic recovery across the globe.

“However, despite intensifying global economic recessionary concerns, PE (private equity) investments in Indian real estate provided favourable avenues for foreign and domestic institutional investors,” Savills said.

Commercial office assets remained the frontrunner during 2022, garnering about half (45%) of the investment pie, on the back of the resilience displayed by investible grade office assets, as reflected in the successful operations of real estate investment trusts (REITs) in India. 

Despite caution emanating out of the US and global inflation, supply chain disruptions from the Russia-Ukraine conflict and continued lockdowns in China, India remains a bright spot in the global economy against a recessionary backdrop of the developed markets, and is expected to maintain the momentum in 2023.

Savills project India to clock in around $3.5b to $4b of private equity investment in real estate in 2023 across segments.

“The government’s digitalisation drive and e-commerce growth is anticipated to increase data centre space requirement by around 15-18 million sq. ft. across major cities over the next 4-5 years,” the report added.