Real Estate Sees Private Equity Inflows Drop 16% In Fiscal 2024, Says Anarock

Private equity funding in the real estate sector fell 16% last fiscal to $3.67 billion on lower interest from foreign investors, according to Anarock. In its report, Capital FLUX, real estate consultant Anarock pointed out that the private equity deals in Indian real estate have declined to $3,674 million in 2023-24 from $4,358 million in the previous year.

The PE inflow in real estate stood at $5,138 million in 2019-20, $6,377 million in 2020-21, $4,236 million in 2021-22 financial year.

"The decline in PE investments in Indian real estate has been due to lower activity by foreign investors, due to global macro-economic factors and geopolitical instability," said Shobhit Agarwal, MD & CEO of Anarock Capital.

The share of foreign capital in total investments declined to 65 per cent in FY24, against 76% in the previous year.

As per the report, PE investments by domestic investors have increased to 29% of the total capital inflows into Indian real estate during the last fiscal as compared to 24% in the previous year.

Out of the total PE inflow in FY24, Anarock said the share of pure equity deals stood at 73% while debt 24%.

In the previous year, the share of equity deals was 66% and debt 32%.

The office segment dominated PE transactions in FY24 with a 57% value share.

This was largely due to the GIC-Brookfield REIT deal, which accounted for about 40% of the total transaction value last fiscal, the consultant said.

"While there has been a consistent share of PE investments in residential real estate at 28%, there is a yearly decline of 17% in the same by value", said Agarwal.

"This is due to a very high base in FY23, when investments had doubled over the previous years," he explained.

While the number of deals in FY24 is largely constant, the aggregate deal value has reduced due to a sharply lower average deal size.

The average ticket sizes have reduced to $75 million in FY24 from $79.2 million in FY20.