The Indian real estate sector has witnessed a year-on-year increase in private investment, which industry analysts claim is a sign of trust and reflects robust health of the Indian economy. An analysis by Anarock, the real estate advisory firm, has reported a 40 per cent increase in such investments in the first half of the financial year 2022-23 as compared to the same time period in the financial year 2021-22.
The report states that the private equity (PE) investment in the first half of the current fiscal was $ 2.8 billion as against $ 2.0 billion in the corresponding period last fiscal. However, it should be noted that the investments are still below the $4.1 billion figure the sector reported in the first half of 2019-2020 fiscal.
Top 10 deals, as compared to the last fiscal, accounted for 86 per cent of the total investments. In the last fiscal, the top 10 deals accounted for 80 per cent of the total investments. The average ticket size of investments has also seen an upward rise from $ 75 million in the first half of the last fiscal to $121 million in the first half of this financial year. The majority of the deals have taken place in multiple cities and in joint ventures.
Mumbai Metropolitan Region (MMR), which was the major focus of investments last fiscal has now been replaced by investments in other regions. National Capital Region (NCR) has seen 60 per cent of the investments in the first half of FY2023. Funding in terms of equity rather than debt has always been a preference, a trend that continued this fiscal as well.
Around 67 per cent of the investments has gone towards commercial deals, which marks the return to office or hybrid style of work as the pandemic waned. Investments in residential projects were 13 per cent of the fundings, while those in the retail sector remained subdued with physical shopping yet to pick up.
Shobhit Agarwal, managing director and CEO of Anarock Capital, says, “Investment focus by private equity investors in the first half and second half of FY22 was markedly strong in MMR. In the first half of the current fiscal, it has shifted to other regions. NCR witnessed a strong increase in capital inflows in PE – from $181 million in the first half of FY22 and $ 590 million in the second half of FY22 to $ 942 million in the first half of FY23.”
There was a 60 per cent rise in investments in the first half of FY23 in NCR compared to the second half of FY22 due to joint venture platform deals like Brookfield + Bharti Enterprises and Bain Capital + TARC, Agarwal said.
