Indian Real Estate Attracts $1.8 Bn PE funds in H1 FY22, Y-o-Y Rise of 27% – ANAROCK

  • Private equity investments were approx. USD 1.41 bn in corresponding period of FY21
  • Commercial sector attracted highest investments (of 33%), followed by Industrial & Logistics (30%) & Residential (22%)
  • Investors this time preferred single city deals in contrast to multi-city deals earlier; top 10 deals in H1 FY22 contributed nearly 81% of the total PE investments in the country
  • Avg. ticket size for PE deals declined 32% – from USD 114 Mn in H1 FY21 to USD 78 Mn in H1 FY22
  • While overall PE inflows in Indian RE increased, share of foreign funds reduced 19% in H1 FY22 compared to H1 FY21; investments by domestic funds jumped from less than USD 10 Mn in H1 FY21 to USD 650 Mn in H1 FY22, reflecting their confidence

Mumbai, 8 October 2021: Displaying continued confidence in the Indian real estate sector, private equity funds pumped about USD 1,790 Mn into the sector in the first half of the FY2022, finds ANAROCK Capital’s latest Flux Market Monitor for Capital Flows in Indian Real Estate. This is a 27% growth over the corresponding period in FY 2021 when inflows were approx. USD 1,410 Mn.

The average ticket size for the PE deals in the current period declined by 32% – from USD 114 Mn in H1 FY21 to USD 78 Mn in H1 FY22. 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% to 42% in H1 FY 2022. Further, the top 10 deals in H1 FY22 contributed an approx. 81% of the total PE investments in the country.

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

Segment-wise Breakup

Of the total private equity inflows of USD 1,790 Mn in the period:

  • The commercial office sector once again attracted the bulk of investments – nearly 33% or approx. USD 591 Mn.
  • The Industrial & Logistics sector saw significant investments of approx. USD 537 Mn in H1 FY22, comprising a 30% overall share.
  • The residential sector saw investments to the tune of USD 394 Mn i.e., approx. 22% of the total PE funds.
  • Data Centres, Land and Mixed-use developments attracted the remaining 15% of the overall PE inflows comprising 5% each

Data further revealed that while overall PE inflows in Indian real estate increased in H1 FY2022, the share of foreign funds reduced by 19% as compared to H1 FY21. Investments by domestic funds jumped from less than USD 10 Mn in H1 FY21 to USD 650 Mn in H1 FY22, a reflection of the improving situation in the country resulting in higher confidence by domestic funds.

Top 10 Deals in H1 FY 2022

Capital Provider Recipient Location Asset Class Deal Size (USD Mn)
Blackstone Embassy Industrial Parks Multiple Industrial & Logistics 500
CPPIB RMZ Chennai & Hyderabad Commercial 205
TRIL Actis TREIT Holding Mumbai Commercial 155
Varde Partners Phoenix Group Hyderabad Commercial 155
PAG Kalpataru Mumbai Mixed-use 100
Godrej Fund Puravankara Bengaluru Land 95
SWAMIH Fund I Multiple Developers NCR Residential 90
Brookfield Infrastructure K Raheja Corp Mumbai Data Centre 80
Blackstone TARC NCR Industrial & Logistics 40
Warburg Pincus Good Host Spaces Multiple Student Housing 70

Source: ANAROCK Capital

Other Notable Trends

With total PE investments seeing a close to 27% yearly jump in H1 FY2022, investor confidence in Indian real estate is seen to be increasing.

  • Foreign investors continued to remain major contributors with an approx. 63% share of the total inflows of USD 1790 Mn. However, in the same period of FY2021, they contributed a 99% share. This indicates the growing confidence of domestic funds amid the growing economy despite the second COVID-19 wave.
  • Investors have maintained their confidence in listed REITs. Post the dip in market capitalization earlier this year, REITs have bounced back well.
  • Demand for flexible offices is gaining momentum; they are expected to attract more PE investments over the next 1-2 years.
  • Operators are aggressively looking at expansion of data centers across major locations in the country.
  • As seen in FY2021 trends, last-mile funding continues to gain momentum. SWAMIH Fund & various foreign funds are actively evaluating and executing various options.
  • The residential sector is witnessing accelerated consumer demand amid a growing preference for homeownership coupled with historically low home loan rates. Investors will seek various investment themes within this asset class.

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