Real estate Platforms in India reported deals worth $4.5 billion in FY23, a latest research showed.
The deals covered across real estate asset classes, with commercial office and the residential sectors dominating private equity (PE) investments, Anarock Capital’s Flux FY23 report said.
Shobhit Agarwal, MD and CEO of Anarock Capital, said commercial real estate and industrial & logistics attracted pan India platforms with larger deal values of over $500 million, while the residential sector attracted smaller ticket platform deals of between $50 million and $125 million in last fiscal year.
The top 10 deals accounted for 69 percent of the total value of PE investments in FY23, the report said.
The report, however, said the average ticket size declined from $86 million in FY22 to $72 million in FY23. This is largely driven by increased activity in residential real estate, where deal sizes tend to be smaller.
Movement of Capital Inflow
The National Capital Region-Delhi (NCR) markets were a key attraction for PE players with 32 percent of total PE inflows in FY23, up from 18 percent in last fiscal.
The southern Indian city of Chennai increased its share of PE inflows to 8 percent of the total PE inflows in FY23, from just one in the last fiscal, the report said.
Equity vs Debt Funding
Equity investment continues to be preferred by PE investors in FY23, with its share posting 67 percent, though debt financing jumped to 33 percent in FY23 compared to 20 percent in the previous fiscal.
Another notable trend in FY23 was that domestic investors were significantly more active in the year, with investment value increasing by 50 percent over the previous fiscal, while foreign investors saw their incremental investments decline by 7 percent.
Greater interest in platform deals
The report said there was a keen interest in platform deals in FY23, reaching $4.5 billion, with most of the large ticket platform deals being in rent-generating assets such as offices and warehouses for pan India developments.
The commercial offices space, however, saw a mixed bag with the IT sector, the largest driver of occupancy, facing uncertainty amidst global headwinds, impacting their expansion plans.
The residential sector continued its robust performance in FY23 despite concerns of demand slowdown due to rate hikes.
Sales and new launches continued to improve during the year, though developers resorted to modest price hikes to cover cost inflation.
The report said the retail sector, driven by a consumption boom amid rising disposable incomes and increased consumerism, is expected to post steady performance in FY24.
FY23 also witnessed major direct investments by hyper-scalers as India is expected to be a large data consumption and generation market in the next decade, making it strategically important in global operators’ APAC strategy.