Private Equity Inflow In Real Estate Flat At $4.2 Billion In FY23; NCR Gets 32% Of Investment: Anarock

Updated on: 14 April 2023 9:35 pm

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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.

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Real estate consultant Anarock's arm Anarock Capital in its report FLUX has tracked capital flows in the sector during the 2022-23 financial year that ended in 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 a healthy share of 67 per cent in FY23 but down from 80 per cent in the previous year.

Increased activity in the residential segment is reflected in a 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 and 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.

The platform deals worth $4.5 billion was announced across real estate asset classes.

Shobhit Agarwal, MD and CEO of 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.