Over half of private equity investments in commercial real estate were in NCR, says report

• NCR commercial real estate emerged as the top PE favourite as it saw investments to the tune of $992 million in the first half of FY23.
  
• The demand in the residential sector has remained healthy at $372 million in H1FY23, says an Anarock report.
  
• Need another bullet The share of investments by foreign investors continued at around 78% in H1FY23.
  

India Inc. is bringing its employees back to work and that has private equity investors excited about the prospects of commercial real estate, according to a report by real estate services firm Anarock Capital.

In the first half of FY23, private equity investments in the space stood at 1,862 million. The average ticket size of an investment also grew from $75 million in H1 FY22 to $121 million in H1 FY23.

“The commercial real estate space is being preferred by private equity investors. The investment share of commercial assets in the overall real estate pie has increased from 18% in H1 FY22 to 67% in H1 FY23,” Shobhit Agarwal, MD & CEO, Anarock Capital said.

NCR beats the financial capital of India

Most of these investments flowed into NCR which saw a 61% rise – in H1 FY23, the investments stood at $992 million — that’s almost half of all private equity investments in commercial real estate.

Chennai is the next private equity favourite with investments worth $257 million followed by Mumbai ($156 million), Hyderabad ($129 million), Bengaluru ($15 million) and Pune ($5 million).

Residential real estate demand remains strong post pandemic

Demand in the residential sector has remained healthy at $372 million in H1 FY23, resulting in it being second most preferred among all asset classes.

“Post-pandemic demand and confidence in the commercial real estate sector has seen a meaningful recovery,” Agarwal said.

“Investor confidence in Indian real estate is increasing steadily on the back of improvement in the Indian economy despite global headwinds, and the continued robustness of its real estate industry,” Anarock said.

Domestic investments increased by 45% and foreign investments increased by 36% of the total capital inflows in Indian real estate in H1FY23 as compared to H1FY22.

The share of investments by foreign investors continued at around 78% in H1 FY23, reflecting the continued global confidence in India’s real estate industry, revealed Anarock.

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