PE deal value in Indian real estate down 30% from 2019-20: Anarock

The aggregate value of private equity (PE) deals in Indian real estate has declined nearly 30 per cent to $3.6 billion in 2023-24 (FY24) as compared to $5.1 billion in FY20, according to a report released on Monday.

It is 16 per cent lower than $4.3 billion in FY23.

According to Anarock Capital’s ‘FLUX: FY24 Annual Edition’ report, in the last five years, FY21 witnessed the highest PE deals value of $6.3 billion.

Moreover, in FY24, only one deal, the $1.4 billion strategic partnership between Brookfield India REIT and GIC, accounted for 40 per cent of total deal value.

Shobhit Agarwal, managing director and chief executive officer at Anarock Capital, said that the decline in PE investments in Indian real estate has been due to lower activity by foreign investors owing to global macro-economic factors and geopolitical instability.

“The share of foreign capital in total investments declined to 65 per cent in FY24, against 78 per cent in FY20.

"Correspondingly, investments by domestic investors have increased to 29 per cent of the total capital inflows into Indian real estate in FY24, compared to merely 8 per cent in FY20.”

Last week, in a report released by Vestian, its CEO Shrinivas Rao highlighted that domestic investors are bullish on India’s growth story and continue to invest in real estate.

However, foreign investors are cautious.

The Anarock report also showed that while the number of deals in FY24 has increased to 49 from 48 in FY20, the aggregate deal value has reduced due to a sharply lower average deal size.

The average ticket size has reduced by 30 per cent to $75 million in FY24 from $107 million in FY20.

It also said that among all asset classes, PE investors were most interested in commercial office space.

These deals accounted for 57 per cent of the value share of all PE transactions in FY24.

It was followed by 28 per cent in residential and 10 per cent in industrial and logistics (I&L).

“While there has been a consistent share of PE investments in residential real estate at 28 per cent year-on-year, there is a yearly decline of 17 per cent 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.”