Real estate records highest PE investment in five years: ANAROCK
Real Estate

Real estate records highest PE investment in five years: ANAROCK

The Indian real-estate sector has recorded the highest-ever private equity (PE) investments since FY2016 despite COVID-induced disruptions.
According to ANAROCK Capital’s Flux – FY20-21 Market Monitor for Capital Flows, over $6.27 billion was invested in the sector in FY21 as against $5.8 billion in FY20, an increase of 19 per cent in one year. Unlike earlier, PE investors in FY21 focused mainly on portfolio deals across multiple cities and assets rather than on specific projects or cities. Such portfolio deals constituted 73 per cent of the overall share, with nearly $4,583 million invested via portfolio deals in multiple cities.

Even as the COVID -19 pandemic adversely affected several industry sectors in FY21, the PE funds pumped into the real-estate sector remained strong.

The Indian real-estate sector has recorded the highest-ever private equity (PE) investments since FY2016 despite COVID-induced disruptions.According to ANAROCK Capital’s Flux – FY20-21 Market Monitor for Capital Flows, over $6.27 billion was invested in the sector in FY21 as against $5.8 billion in FY20, an increase of 19 per cent in one year. Unlike earlier, PE investors in FY21 focused mainly on portfolio deals across multiple cities and assets rather than on specific projects or cities. Such portfolio deals constituted 73 per cent of the overall share, with nearly $4,583 million invested via portfolio deals in multiple cities.Even as the COVID -19 pandemic adversely affected several industry sectors in FY21, the PE funds pumped into the real-estate sector remained strong. As much as 93 per cent of the total PE investments into the Indian real-estate market was by foreign investors. In actual terms, investments by foreign PE funds almost doubled from $3 billion to $5.8 billion in FY21. In contrast, domestic PE funds invested merely $300 million compared to $420 million in FY20, the report mentioned.According to Shobhit Agarwal, Managing Director & CEO, ANAROCK Capital, “Foreign funds are evidently very upbeat about India. High-grade, rental-generating assets have attracted foreign investors in a big way during the year. Moreover, India has a strong underlying demand for office space with a quality workforce and average rentals available at less than a dollar per sq ft per month.”He adds, “Alongside, the successful REIT listings have provided a good monetising option for PE investors, leading to a stronger demand for good-quality rental earning office and retail assets. Good entry valuation coupled with the option to accumulate a healthy mix of portfolio assets has also driven this surge in foreign PE investments. During the year, PE funds like Blackstone and Brookfield have added a lot of assets to their existing portfolios, while others have taken over loan portfolios of NBFCs.”The average ticket size of PE deals increased by 62 per cent in the fiscal year, from $110 million in FY20 to $178 million in FY2021. Both structured debt and equity witnessed strong growth during the year at 84 per cent and 15 per cent, respectively. Structured debt was largely towards portfolio deals instead of project-level assets.A notable trend was that among the foreign PE investors that remained major contributors for overall PE inflows in India, US and Canada-based investors pumped in over 50 per cent of total foreign PE investments in FY21, the ANAROCK report said. 

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