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March 1, 2024
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Private Equity

Private equity investments into real estate register 26% decline in 9M FY 2024


Private equity investments in real estate registered a decline of approximately 26% in nine months of FY24 as both foreign and domestic investors reported lower activity. Activity from foreign investors remained subdued for most of this period due to global geopolitical uncertainties and a high interest rate environment, finds ANAROCK Capital’s FLUX report for 9M FY24.

Movement of Capital Inflow; MMR leads

Private equity investments in real estate registered a decline of approximately 26% in nine months of FY24 as both foreign and domestic investors reported lower activity.(Pixabay)

Multi-city transactions increased sharply during 9M FY24, dominated by the Brookfield India REIT and GIC. Mumbai Metropolitan Region led the transaction league tables in city-specific transactions, with the region reporting investments of $ 694 mn in 9M FY24, against $ 375 mn in 9M FY23.

Equity vs Debt Funding

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PE investors continue to prefer equity investments, which is visible from the fact that the PE share stood at a healthy at 84%.

Also Read: Year Ender 2023: PE investments in Indian real estate decline by 44% to $3 bn so far this year

Asset Class-wise Funding

The commercial real estate sector has seen an increased share in PE deals in 9M FY24, driven by a single large transaction and reduced activity in residential real estate.

“Domestic Alternate Investment Funds have seen lower activity levels as their favoured asset class – residential real estate debt – witnessed lower demand for high-cost funds. Strong residential pre-sales and an accommodative stance by state-owned banks have led to reduced demand for capital from the more expensive AIFs,” said Shobhit Agarwal, MD and CEO – ANAROCK Capital.

Top 10 PE Deals in 9M FY24

The share of the top 10 deals was 87% of the total value of PE investments in 9M FY24 as compared to 76% in 9M FY23, said the report.

Average Ticket Size

The average ticket size has marginally increased to $95 mn in 9M FY24 from $ 91 mn in 9M FY23. This is largely due to a large deal in which Brookfield India Real Estate Trust REIT and Singapore’s sovereign wealth fund GIC together acquired two commercial assets – one in Mumbai and the other in Gurugram, NCR, from Brookfield Asset Management with an enterprise value of $1.4 bn, the report said.

Also Read: Indian real estate market size estimated to jump over 12-fold to USD 5.8 trillion by 2047: Report

Domestic vs Foreign Funding

“Investments by foreign investors have increased to 86% in 9M FY24 as compared to 79% in 9M FY23,” said Shobhit Agarwal. “Correspondingly, domestic investments decreased to 14% of the total capital inflows into Indian real estate in 9M FY24 – at $360 mn, compared to $717 mn in 9M FY23,” he added.

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