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Mumbai - Significant numbers of large real estate platform deals were announced in FY23, finds ANAROCK Capital’s FLUX FY23 Report. Platform deals worth $4.5 Bn were announced across real estate asset classes.

Shobhit Agarwal, MD & CEO – ANAROCK Capital, says, “Commercial real estate and Industrial & Logistics attracted Pan India platforms with larger deal values of over $500 Mn, while the residential sector attracted smaller ticket platform deals of between $50 Mn and $125 Mn, and these were largely regional in nature.”

Top 10 PE Deals in FY23

Office assets dominated large ticket equity investments in FY23. Residential RE continued as an attractive destination for debt investments in FY23.

Share of Top 10 Deals

The top 10 deals accounted for 69% of the total value of PE investments in FY23 - largely stable compared to 67% in FY22.

Average Ticket Size

The average ticket size declined from $86 Mn in FY22 to $72 Mn in FY23. This is largely driven by increased activity in residential real estate, where deal sizes tend to be smaller.

Movement of Capital Inflow

NCR markets were a key attraction for PE players with 32% of total PE inflows in FY23, up from a share of 18% in FY22. Chennai accounted for 1% of total PE inflows in FY22 but increased its share to 8% of total PE inflows in FY23.

NCR, Chennai, Bengaluru & Hyderabad witnessed increased activity levels in FY23, while MMR, multi-city deals and other cities witnessed lower activity levels than in FY22.

Equity vs Debt Funding

Equity investment is preferred by PE investors, visible from the fact that its share continues to be healthy at 67%. Increased activity in residential RE is reflected in higher share of debt at 33% in FY23 compared to 20% in FY22.

Asset Class-wise Funding

Commercial Office and the residential sectors continued to dominate PE activity respectively in FY23. Industrial & Logistics saw subdued activity post a robust FY22 and muted demand in FY23, especially from e-commerce players.

Domestic vs Foreign Funding

Domestic investors were significantly more active in FY23, with investment value increasing by 50% in FY23 ($0.9 Bn) over FY22 ($0.6 Bn). At the same time, foreign investors saw their incremental investments decline by 7% to $3.2 Bn in FY23, from $3.4 Bn in FY22. Consequently, the share of domestic PE investors in Indian RE increased from 14% in FY22 to 22% in FY23.

Key Takeaways

In FY23, there was a keen interest in platform deals, which generated a total deals value of $4.5 Bn.

Most of the large ticket platform deals were in rent-generating assets (offices & warehouses) for pan India developments, while smaller ticket items were largely for residential developments in southern cities of India.

Offices continued to dominate the large ticket equity transactions, while residential projects continued to dominate debt instruments in FY23.

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