Private equity investments in real estate decline 26 per cent to USD 2.65 billion in April-December

Image Source : PIXABAY Real estate (Representative)

Private equity investments in real estate declined 26 per cent year-on-year to USD 2.65 billion in the April-December period of this fiscal as foreign and domestic investors were cautious amid global uncertainties, according to Anarock.

In comparison, the previous year witnessed a private equity inflow of USD 3.6 billion during the same period.

Out of the total private equity inflow, equity constituted 84 per cent, while the remaining portion was in the form of debt, as highlighted in Anarock Capital’s FLUX report.

Shobhit Agarwal, MD and CEO of Anarock Capital, noted that foreign investors’ contribution to the overall private equity inflow has surged to 86 percent from 79 percent in the previous year, while domestic investors’ share dropped to 14 percent during April-December of FY24. This decline in domestic investment amounted to USD 360 million compared to USD 717 million in the corresponding period of the previous fiscal.

“Domestic investment shares decreased to 14 per cent of the total capital inflows into Indian real estate in the April-December period of FY24,” he said. 

Subdued activity from investors  

Anarock observed a decline in investments due to reduced activity from both foreign and domestic investors. Foreign investors remained cautious amid global geopolitical uncertainties and a high-interest rate environment, leading to subdued activity during this period.

“Domestic AIFs have seen lower activity levels as their favoured asset class ‘residential real estate debt ‘ witnessed lower demand for high-cost funds,” Agarwal said.

“Strong residential pre-sales and an accommodative stance by state-owned banks have led to reduced demand for capital from the more expensive alternate investment funds (AIFs),” he said.

The average ticket size for investments slightly increased to USD 95 million in April-December of FY24 compared to USD 91 million in the previous year. This uptick was primarily influenced by a significant deal where Brookfield India Real Estate Trust REIT and Singapore’s sovereign wealth fund GIC jointly acquired two commercial assets in Mumbai and Gurugram, Delhi-NCR, from Brookfield Asset Management for an enterprise value of USD 1.4 billion.

(With PTI inputs)

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