Private equity investment in real estate remained stable in the last fiscal at $4.2 billion, of which 22 per cent contribution came from domestic investors, according to Anarock. Delhi-NCR market received 32 per cent of the total investment, while office assets garnered 40 per cent of inflows. Foreign investors' contribution stood at more than 75 per cent.
Real estate consultant Anarock's arm Anarock Capital in its report FLUX has tracked capital flows in the sector during 2022-23 financial year ended March. Private Equity (PE) investments have remained stable during 2022-23 at $4.2 billion. PE inflows stood at $4.2 billion in 2021-22, $7.2 billion in 2020-21, $6.3 billion in 2019-20, and $5.3 billion in 2018-19, the report showed.
Domestic investors were significantly more active in FY23, with investment value increasing by 50 per cent in FY23 ($0.9 billion) over FY22 ($0.6 billion). Inflows from foreign investors declined 7 per cent to $3.2 billion in FY23, from $3.4 billion in FY22. Consequently, the share of domestic PE investors increased to 22 per cent in FY23 from 14 per cent in FY22.
The average ticket size declined from $86 million in FY22 to $72 million in FY23 due to increased activity in residential real estate where deal sizes tend to be smaller. NCR markets were a key attraction for PE players with 32 per cent of total PE inflows in FY23, up from a share of 18 per cent in FY22.
Chennai's share increased to 8 per cent from 1 per cent. NCR, Chennai, Bengaluru and Hyderabad witnessed increased activity levels in FY23, while MMR (Mumbai Metropolitan Region), multi-city deals and other cities witnessed lower activity levels than in FY22. According to the report, equity investment is preferred by PE investors with healthy share of 67 per cent in FY23 but down from 80 per cent in the previous year. Increased activity in residential segment is reflected in higher share of debt at 33 per cent in FY23 compared to 20 per cent in FY22.
Among asset class-wise funding, office and the residential segments continued to dominate PE activity in FY23 with 40 per cent and 29 per cent share, respectively. Mixed used development attracted 10 per cent of inflow, while retail real estate only 2 per cent. Industrial & logistics and data centre together got 6 per cent of PE investments in FY23, down from 23 per cent in FY22.
Anarock also noted that a significant number of large real estate platform deals were announced in FY23. Platform deals worth $4.5 billion were announced across real estate asset classes. Shobhit Agarwal, MD & CEO – Anarock Capital, said, "Commercial real estate and industrial & logistics attracted pan-India platforms with larger deal values of over $500 million, while the residential sector attracted smaller ticket platform deals of between $50 million and $125 million, and these were largely regional in nature." Anarock is one of the leading real estate consultants in India.
