Private equity investors have invested $1,215 million into real estate in the National Capital Region or NCR in the first nine months of FY23, against $771 million in the corresponding period in the previous financial year, an increase of 58%, according to Anarock.
The report said Mumbai Metropolitan Region or MMR witnessed a drop in total inflows during the period from $574 million to $224 million.
Interestingly, Chennai, which accounted for a mere 1% share of total PE inflows in 9 months of FY22, saw its share rise to 8% in 9 months in FY23. As much as $268 million were invested in Chennai in 9 months in FY23, against $37 million in 9 months of FY22.
Overall, Indian real estate attracted $3.4 billion of PE funding in nine months in FY23, against $3.3 billion in the corresponding period in FY22 – an annual increase of 3%.
“With a rise in the hybrid work model and corporates expanding into tier 2 cities for their ease of working, demand and confidence in the commercial space has resurged. Confidence in the residential sector is also high currently, and will remain constant on the back of strong continued homeownership sentiment," said Shobhit Agarwal, MD & CEO – Anarock Capital.
“In the retail segment, PE investments have remained subdued but are expected to gain momentum with physical shopping levels returning," Agarwal said.
The top 10 deals alone accounted for 76% of the total value of PE investments in 9 months in FY23, compared to 72% in 9 months in FY22. The average deal ticket size rose from $82 million in 9 months in FY22 to $91 million in 9 months in FY23.
As per the report, PE investors prefer equity investment, which is visible from the fact that its share continues to be a healthy 77%.
The commercial real estate sector has witnessed increased capital inflows via PE investments, accounting for the highest market share of 55% in 9 months in FY23 as compared to 33% in 9 months in FY22. This can be attributed to investors’ continued preference for Grade A office assets with quality tenants.
“As an aftermath of pandemic, demand in residential sector has resulted in it drawing the second-highest share of 23% in 9 months in FY23. The residential asset class has seen PE growing from $568 million in 9 months in FY22 to $772 million in 9 months in FY23," the report said.
At $948 million, domestic investments increased to 61% of the total PE capital inflows in Indian real estate in 9 months in FY23, compared to $587 million in 9 months in FY22. Foreign investments have dropped to 71% in 9 months in FY23 compared to 78% in 9 months in FY22.
