In spite of the pandemic, more than $6.27 billion have been pumped into the Indian genuine estate sector in FY2021, as against $5.8 bn in FY20 – an improve of 19% in one year – which was the highest-ever PE investments in the sector because FY16, according to ANAROCK Capital’s ‘Flux – FY20-21 Market Monitor for Capital Flows’.
Unlike earlier, FY2021 saw private equity investors concentrate majorly on portfolio offers across a number of cities and assets, rather on certain projects or cities. Such portfolio offers constituted 73% of the general share, with close to $4,583 million invested by way of portfolio offers in a number of cities.
The typical ticket size of PE offers rose by 62% in the fiscal year – from $110 million in FY20 to $178 mn in FY21. Both structured debt and equity witnessed robust development for the duration of the year at 84% and 15%, respectively. Structured debt was largely towards portfolio offers alternatively of project-level assets.
Though FY21 was an unprecedented year due to the pandemic, foreign PE funds showed substantially optimism for India. As substantially as 93% of the total PE investments pumped into Indian genuine estate was by foreign investors. In actual terms, investments by foreign PE funds just about doubled from $3 billon to $5.8 bn in FY21. In contrast, domestic PE funds invested merely $300 mn compared to $420 mn in FY2020.
Commenting on the identical, Shobhit Agarwal, MD & CEO, ANAROCK Capital, says, “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 quality workforce and average rentals available at less than a dollar per sq. ft. per month.”
“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,” he adds. “Good entry valuation coupled with the option to accumulate a healthy mix of portfolio assets have 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 takeover loan portfolios of NBFCs.”
Among other important trends, the share of asset classes like industrial, retail and hotel has been quite excellent. While the asset class-sensible bifurcation shows reduce percentage, when thought of along with portfolio offers (exactly where bifurcation is not offered), the share of these assets classes is robust. Nearly 66% of the total inflows ($6.27 bn) in FY21 was across portfolio offers in a number of asset classes. In contrast, in FY20, out of the $5.28 bn total inflows, just 8% of the total comprised of portfolio offers.
The prime 10 offers alone contributed almost 78% of the total PE inflows in FY2021 as against 67% in FY2020: