PE inflow into Indian real estate sector grows 19% in FY 21, despite Covid 19 pandemic

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Notwithstanding the Covid 19 pandemic, private equity (PE) inflow into the Indian real estate sector jumped by 19 per cent in FY 2020-21 to over $6.27 billion—the highest since FY 2015-16, an Anarock report said.</p>
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PE investments into the realty sector stood at $5.8 billion in the previous financial year.</p>
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Despite the Covid 19 pandemic, foreign PE funds showed much optimism for India in FY21. As much as 93 per cent of the total PE investments pumped into Indian real estate was by foreign investors. In actual terms, investments by foreign PE funds almost doubled from $3 billion to $5.8 billion in FY21. In contrast, domestic PE funds invested merely $300 million compared to $420 million in FY20.</p>
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Unlike earlier, FY21 saw private equity investors focus primarily on portfolio deals across multiple cities and assets, rather on specific projects or cities. Such portfolio deals constituted 73 per cent of the overall share, with about $ 4,583 million invested via portfolio deals in multiple cities, a statement by Anarock said.</p>
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The average ticket size of PE deals rose by 62 per cent in the fiscal year – from $110 million in FY20 to $178 million in FY21. Both structured debt and equity witnessed strong growth during the year at 84 per cent and 15 per cent respectively.</p>
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"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 square foot per month," Shobhit Agarwal, MD & CEO, Anarock Capital said.</p>