Global PEs continue to evince interest in Indian real estate

October 15, 2022

New Delhi

Indian real estate continues to evince private equity investment interest. The average deal size in the first half of the fiscal (April–September) was $121 million – up 61 per cent Y-o-Y, and 14 per cent over the $106 million in H2FY22.

Multi-city deals – beyond Mumbai – were signed in NCR, Bengaluru and Chennai. The deployment by JV platforms is also seen driving numbers.

According to real estate consultancy firms, Savills, PE investment deals in July–September was $322 million; down by 33 per cent against $477 million reported in the year-ago-period. Commercial office assets garnered about 47 per cent of the investment pie.

Fund deployment could be slower because of global recessionary trends.

“Offices, life sciences, data centres, and industrial are witnessing interest in investment inflows. On a slightly longer term, we may witness new fund managers and investors enter the Indian real estate market,” said Diwakar Rana, Managing Director, Capital Markets, Savills India.

Key transactions during the September-quarter include Singapore’s Keppel Land buying 1 million sq ft of space in Piramal Realty’s Agastya Corporate Park at $150 million; Equinix buying a 4-acre land parcel for MB3 at $86 million and Varde Partners investing $50 million in Casagrand.

PE inflows up 40 per cent in H1

According to Anarock, PE investments registered an increase of 40 per cent in H1 FY23 as compared to H1 FY22.

 “Investment focus by PEs in FY22 was markedly strong in MMR (Mumbai Metropolitan Region). In H1FY23, there’s a shift to other regions like the National Capital Region (NCR). We saw a 60 per cent rise in investments in H1FY23 in NCR, compared to H2FY22; due to JV platform deals like Brookfield – Bharti Enterprises and Bain Capital – TARC,” said Shobhit Agarwal, MD and CEO, Anarock Capital.

Equity investments in real estate was 43 per cent higher in H1FY23, Y-o-Y, while debt funding, grew by 20 per cent.

PE investments in commercial real estate saw “meaningful recovery,” says Agarwal, adding that $1,862 million investments were made in H1FY23 – almost equivalent to the investment in the whole of last year. The investments in residential sector was $372 million for the first six months of the fiscal.

According to Colliers, institutional investments in Indian real estate touched $3.6 billion during January – September 2022 (nine month period), a hike of 18 per cent YoY.

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