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