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PE investment in Indian real estate down 26% in Apr-Dec 23: Report

Activity by foreign institutions has been subdued due to global geopolitical uncertainty

private equity, PE, investors, investments, companies, firms, VC

Multi-city investments increased sharply in 9M FY24, dominated by the Brookfield India REIT & GIC. Mumbai Metropolitan Region led in such transactions, reporting investments of $694 million in 9M FY24 compared to $375 million in 9M FY23.

Abhijit Lele Mumbai

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Private equity (PE) investments in Indian real estate fell by 26 per cent to $2.65 billion in April-December 2023 (nine months of Financial Year 2023-24, 9M FY24) compared to $3.6 billion the same time in FY23, said a report on Tuesday.

Foreign investors have been subdued for most of FY24 due to global geopolitical uncertainties and high interest rates, according to Anarock Capital. PE investors preferred equity investments over debt. The share of equity was at 84 per cent.

The average ticket size of a PE investment slightly increased to $95 million in 9M FY24 from $91 million in 9M FY23. The FY24 number was shaped largely due to Brookfield India Real Estate Trust REIT and GIC, Singapore’s sovereign wealth fund, together acquiring two commercial assets in Mumbai and Gurugram.

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Multi-city investments increased sharply in 9M FY24, dominated by the Brookfield India REIT & GIC. Mumbai Metropolitan Region led in such transactions, reporting investments of $694 million in 9M FY24 compared to $375 million in 9M FY23.

Domestic alternate investment funds (AIFs) are showing lower activity as their favoured asset class – residential real estate debt – as demand dips for high-cost funds, said Shobhit Agarwal, managing director and chief executive officer of Anarock Capital. Strong residential pre-sales and an accommodative stance by state-owned banks have led to demand reduction for capital from AIFs.

Commercial real estate’s share in PE deals increased in 9M FY24, driven by a single large transaction and reduced activity in the residential sector. Interest surged in luxury and premium residential projects as homebuyers aspire to transition to more spacious living in vibrant communities, said Anarock.

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Homebuyers are becoming younger, with the age bracket dropping from 40+ to sub-40. The trend has implications on product design and the value offering of housing projects.

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First Published: Jan 09 2024 | 1:30 PM IST

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