Real estate private equity (PE) investments registered a decline of 32 per cent in FY22 as compared to FY21. At least partially to blame for this was the destructive effect of the second wave of Covid which led to multiple lockdowns in various parts of the country and serious economic disruptions in almost all industries, according to a report by real estate consulting firm Anarock.
FY22 also saw a huge drop of 42 per cent in average deal ticket size compared to FY21, although it is still higher than FY18 levels. The drop in ticket sizes is largely due to investors' focus shifting back to individual assets, as opposed to their preference for portfolio deals in FY21, said Anarock. Unlike in FY21, investors in FY22 preferred single city deals over multi-city deals, resulting in the share of multi-city deals reducing by nearly 70 per cent in FY22.
Shobhit Agarwal, MD and CEO of Anarock Capital, said, "Equity continues to remain around 80 per cent of the total PE investments in Indian real estate. The commercial sector attracted the highest investment in FY22 with 38 per cent of the inflows, followed by the industrial and logistics sector with 22 per cent, and residential clocked in at a mere 14 per cent of the inflows.”
“Meanwhile, investments by domestic funds doubled in size in FY22 – from $290 million (FY21) to $600 million in FY22.
The increasing confidence of domestic funds reflects the return of overall positivity after a harrowing year of pandemic disruption and uncertainty,” he added.
However, the pandemic’s impact has started to wane on the realty sector as quarterly housing sales in the March quarter (Q4) were at an all-time high since 2015 with approximately 99,550 units sold across the top 7 cities, according to data from Anarock. This is a 71 per cent rise compared to the 58,290 units sold back in the year-ago period.
Office space transactions also grew 25 per cent year-on-year in the March quarter to 10.8 million square feet (msf), according to a report by real estate consulting firm Knight Frank.
Bengaluru remained the biggest market with total leasing of 3.5 msf of office space, followed by Delhi-NCR which recorded 2.3 msf of gross leasing in the first three months. New completion in the first quarter (Q1) of CY22 was recorded at 11.9 msf led by Pune that saw fresh supply of 3.6 msf followed by Bengaluru with 2.5 msf of new office spaces.
Rents have stabilised or grown in sequential terms during Q1, the report said. Even compared to the year-ago period, rents have stayed stable or grown in five of the eight markets. Bengaluru saw the most growth with a YoY (year-on-year) rise in rental values by 4 per cent in the first quarter.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU