Private equity funding in Indian real estate sector experienced a 16% decline in the last fiscal year, dropping to USD 3.67 billion. Anarock’s report, Capital FLUX, highlighted the decrease in private equity (PE) deals in Indian real estate, falling from USD 4,358 million to USD 3,674 million in 2023-24 compared to the previous year. The PE inflow stood at USD 5,138 million in 2019-20, USD 6,377 million in 2020-21, and USD 4,236 million in the 2021-22 financial year.
The decline in PE investments in Indian real estate can be attributed to reduced interest from foreign investors, impacted by global macro-economic factors and geopolitical instability, according to Shobhit Agarwal, MD & CEO of Anarock Capital. The share of foreign capital in total investments dropped to 65% in FY24 from 76% in the previous year. Conversely, PE investments by domestic investors increased to 29% of the total capital inflows into Indian real estate during the last fiscal year, up from 24% in the previous year.
In FY24, the share of pure equity deals in total PE inflows was 73%, with debt deals accounting for 24%. This is a shift from the previous year, where the share of equity deals was 66% and debt deals were 32%. The office segment dominated PE transactions in FY24, capturing a 57% value share. This was largely driven by the GIC-Brookfield REIT deal, which represented approximately 40% of the total transaction value last fiscal year, as noted by Anarock.
Despite a consistent share of PE investments in residential real estate at 28%, there was a 17% year-on-year decline in value. This decline was primarily due to the exceptionally high base in FY23, when investments had doubled over the previous years. While the number of deals in FY24 remained relatively stable, the aggregate deal value decreased due to a significantly lower average deal size, reducing from USD 79.2 million in FY20 to USD 75 million in FY24.
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