PE Firms Invest 19% More Into Real Estate Despite Pandemic

Private equity investment in real estate rose 19 per cent last fiscal year to 6.27 billion dollars despite the Covid-19 pandemic, driven by increased interest from foreign investors, according to property consultant Anarock.

Anarock Capital in its latest report 'Flux – FY20-21 Market Monitor for Capital Flows' highlighted that despite Covid-19, more than 6.27 billion dollars were pumped into the sector in 2020-21, as against 5.8 billion dollars in FY20.

Shobhit Agarwal, MD & CEO - ANAROCK Capital, said, "Foreign funds are evidently very upbeat about India. High-grade rental-generating assets have attracted foreign investors in a big way during the year."

"Moreover, India has a strong underlying demand for office space with quality workforce and average rentals available at less than a dollar per sq ft per month" he added.

Unlike earlier years, the fiscal year 2020-21 saw private equity investors focus majorly on portfolio deals across multiple cities and assets, rather on specific projects or cities, the report said.

Such portfolio deals constituted 73 per cent of the overall share, with approx. 4,583 million dollars invested via portfolio deals in multiple cities.

The average ticket size of PE deals rose by 62 per cent in the fiscal year – from 110 million dollars in 2019-20 to 178 million dollars in 2020-21.

Both structured debt and equity witnessed strong growth during the year at 84 per cent and 15 per cent, respectively. Structured debt was largely towards portfolio deals instead of project-level assets.

Foreign PE funds showed much optimism for India. As much as 93 per cent of the total PE investments pumped into Indian real estate was by foreign investors.

Investments by foreign PE funds almost doubled from 3 billion dollars to 5.8 billion dollars in 2010-21.

In contrast, domestic PE funds invested merely 300 million dollars compared to 420 million dollars in 2019-20.

"... the successful REIT listings have provided a good monetising option for PE investors, leading to a stronger demand for good quality rental earning office and retail assets" he said.