Private equity inflow in real estate up 27% in April-September at $1.79 billion

Private equity (PE) investment in Indian real estate rose 27 per cent to USD 1.79 billion in the first six months of the current fiscal mainly driven by domestic funds, according to property consultant Anarock.

PE inflows stood at USD 1.41 billion in the year-ago period.

According to the data, the office segment attracted nearly 33 per cent of total PE inflows at USD 591 million. The industrial and logistics sector saw significant investments of about USD 537 million in the first half of FY’22, comprising a 30 per cent overall share.

The residential sector saw investments to the tune of USD 394 million, 22 per cent of the total PE funds. Data centres, land and mixed-use developments attracted the remaining 15 per cent of the overall PE inflows, comprising 5 per cent each.

“Displaying continued confidence in the Indian real estate sector, private equity funds pumped about USD 1,790 million into the sector in the first half of the FY 2022,” Anarock Capital said in its ‘Flux Market Monitor for Capital Flows in Indian Real Estate’.

This is a 27 per cent growth over the corresponding FY 2021, when inflows were approximately USD 1,410 million, it added.

“The average ticket size for the PE deals in the current period declined by 32 per cent – from USD 114 million in H1 of FY21 to USD 78 million in H1 of FY ’22,” said Shobhit Agarwal, MD & CEO – Anarock Capital.

“Notably, investors this time preferred single city deals in contrast to multi-city deals. As seen, the share of multi-city deals reduced from 77 per cent to 42 per cent in H1 of FY’22. Further, the top 10 deals in H1 FY22 contributed an approx 81 per cent of the total PE investments in the country,” Agarwal said.

In comparison with H1 FY21, structured debt and equity witnessed considerable growth in H1 FY22, at 25 per cent and 28 per cent, respectively. Structured debt went primarily towards project-level assets.

While overall PE inflows in Indian real estate increased in H1 FY2022, the share of foreign funds reduced.

“Investments by domestic funds jumped from less than USD 10 million in H1,FY21 to USD 650 million in H1, FY22, a reflection of the improving situation in the country resulting in higher confidence by domestic funds,” Anarock said.

Foreign investors continued to remain major contributors with about 63 per cent share of the total inflows of USD 1,790 million. However, in the same period of FY2021, they contributed a 99 per cent share.