PE Investors Infuse $1,215 Mn into NCR Real Estate in 9M FY23 – a 58% Y-o-Y Rise

  • MMR, on the other hand, saw a dip – from $574 Mn in 9M FY22 to $224 Mn in 9M FY23
  • Chennai also saw increased PE action – from $37 Mn in 9M FY22 to approx. $268 Mn in 9M FY23
  • Overall, Indian real estate attracted $3.4 Bn in 9M FY23 against approx. $3.3 Bn in this period in FY22, rising by 3%
  • Top 10 deals alone accounted for 76% of total PE funding value in 9M FY23, compared to 72% in 9M FY22
  • Average ticket size increased from $82 Mn in 9M FY22 to $91 Mn in 9M FY23

Mumbai, January 11, 2023: The Covid-19 pandemic was no deterrent for the NCR real estate market, which remained vibrant and performed remarkably well in 2022The region witnessed more interest from private equity players than its counterpart realty hotspot MMR.

ANAROCK Capital’s Flux – 9M FY23 report reveals that PE players invested USD 1,215 Mn into NCR the first nine months (9M) of FY23, against USD 771 Mn in the corresponding period in the previous financial year. This was a 58% yearly jump in total PE inflows in the region.

The report finds that MMR witnessed a drop in total inflows during the period – from USD 574 Mn in 9M FY22 to USD 224 Mn in 9M FY23. Investor focus has shifted visibly. Interestingly, Chennai, which accounted for a mere 1% share of total PE inflows in 9M FY22, saw its share rise to 8% in 9M FY23. As much as USD 268 Mn were invested in Chennai in 9M FY23, against USD 37 Mn in 9M FY22.

Overall, Indian real estate attracted USD 3.4 Bn of PE funding in 9M FY23, against USD 3.3 Bn in the corresponding period in FY22 – an annual increase of 3%.

Source: ANAROCK Capital

The top 10 deals alone accounted for 76% of the total value of PE investments in 9M FY23, compared to 72% in 9M FY22. The average deal ticket size rose from USD 82 MN in 9M FY22 to USD 91 MN in 9M FY23. 

Top 10 PE Deals in 9M FY23
Capital Provider Recipient Location Asset Class Deal Amount (USD Mn) Debt or Equity
CPPIB TRIL Multiple Commercial                                           700 Equity
Brookfield Bharti Enterprises NCR Commercial                                           660 Equity
HDFC Capital Advisors Shapoorji Pallonji Multiple Residential                                           194 Debt
Axis AMC Tishman Speyer Multiple Commercial                                           188 Equity
CapitaLand Investment CapitaLand Development Chennai Commercial                                           177 Equity
Bain Capital TARC (Anant Raj) NCR Residential                                           175 Debt
Brookfield IL&FS MMR Commercial                                           137 Equity
Brookfield L&T Metro Rail

(Larson & Toubro)

Hyderabad Land                                           129 Equity
Credit Suisse Adani Properties Multiple Mixed Use                                           101 Debt
Blackstone Vertical Warehousing NCR Logistics & Warehousing                                              88 Equity

Source: ANAROCK Capital 

Shobhit Agarwal, MD & CEO – ANAROCK Capitals, says, “With a rise in the hybrid work model and corporates expanding into tier 2 cities for their ease of working, demand and confidence in the commercial space has resurged. Confidence in the residential sector is also high currently, and will remain constant on the back of strong continued homeownership sentiment.”

“In the retail segment, PE investments have remained subdued but are expected to gain momentum with physical shopping levels returning,” he says. “Thanks to the buoyant manufacturing sector, favourable government policies and the booming 3PL sector, high momentum is expected in the Industrial & Logistics sector in the future.”

Other Key Highlights

  • Equity vs Debt Funding: PE investors prefer equity investment, which is visible from the fact that its share continues to be a healthy 77%
  • Asset Class-wise Funding: The commercial real estate sector has witnessed increased capital inflows via PE investments, accounting for the highest market share of 55% in 9M FY23 as compared to 33% in 9M FY22. This can be attributed to investors’ continued preference for Grade A office assets with quality tenants. As an aftermath of pandemic, demand in residential sector has resulted in it drawing the second-highest share of 23% in 9M FY23. The residential asset class has seen PE growing from 568 USD Mn in 9M FY22 to 772 USD Mn in 9M FY23.
  • Domestic vs Foreign Funding: At 948 USD Mn, domestic investments increased to 61% of the total PE capital inflows in Indian real estate in 9M FY23, compared to 587 USD Mn in 9M FY22. Foreign investments have dropped to 71% in 9M FY23 compared to 78% in 9M FY22.

Click to download ANAROCK Capital’s Flux – 9M FY23