The total value of private equity deals in the real estate sector declined over the past five years to $3.67 billion in FY24, due to reduced activity by foreign investors. This marks a 16% year-on-year drop from $4.36 billion recorded in FY23, according to an Anarock report.
Average deal sizes also decreased to $75 million in FY24 from $79.2 million in FY20. In FY22, the value of PE deals was $4.24 billion, down from $6.38 billion in FY21, while FY20 saw $5.14 billion in deals.
“The decline has been due to lower activity by foreign investors, due to global macro-economic factors and geopolitical instability. The share of foreign capital in total investments declined to 65% in FY24, against 78% in FY20. Correspondingly, investments by domestic investors have increased to 29% of the total capital inflows into Indian real estate in FY24, as compared to merely 8% in FY20,” Anarock Capital MD & CEO Shobhit Agarwal said.
In FY24, pure equity deals accounted for 73% of transactions in the sector, with debt making up 24%, compared to 66% equity and 32% debt in FY23.
Multi-city transactions were prominent in FY24, highlighted by the GIC-Brookfield deal and Prestige Estates’ fundraising. National capital region (NCR) experienced subdued activity, while Mumbai Metropolitan Region (MMR) remained dominant in city-specific deals.
Brookfield India REIT and GIC forming a partnership to acquire two grade-A assets for $1.4 billion topped the charts in the equity deals, while global alternative investment firm Varde Partners lending about $91 million to Hyderabad-based developer Phoenix Group through a mezzanine debt transaction topped the debts’ chart.
Commercial offices dominated PE transactions in FY24, claiming a 57% value share, mainly due to the GIC-Brookfield deal, which represented about 40% of the total transaction value.
“While there has been a consistent share of PE investments in residential real estate at 28% YoY, there was a yearly decline of 17% in the same by value. This was due to a very high base in FY23, when investments had doubled over the previous years,” Agarwal said.
The emergence of specialised investors focusing on stressed asset resolutions was notable in the real estate segment, with lenders increasingly opting to settle with promoters to avoid litigation.