PE Investments in Indian Real Estate Dip by 26% in FY24’s First Nine Months, Reveals ANAROCK Capital Report
Investments in the Indian real estate sector through Private Equity (PE) witnessed a notable decline of approximately 26% during the initial nine months of the financial year 2023-24, according to insights from ANAROCK Capital’s FLUX report for 9M FY24. The report unveiled that PE investments totaled $2.65 billion from April to December, down from $3.6 billion during the same period in the previous fiscal year.
Foreign and domestic investors both exhibited reduced activity, with foreign investors, in particular, remaining cautious amidst global geopolitical uncertainties and a high-interest rate environment, as highlighted by the report. The subdued international participation contributed to the overall contraction in PE investment activity during this timeframe.
The report emphasized that the top 10 deals accounted for a substantial 87% of the total value of PE investments in the first nine months of FY24. Moreover, the average ticket size marginally increased from $91 million in 9M FY23 to $95 million in 9M FY24. This incremental growth was attributed, in part, to a significant deal where Brookfield India Real Estate Trust REIT and Singapore’s Sovereign Wealth Fund GIC jointly acquired two commercial assets, one in Mumbai and another in Gurugram in the NCR, from Brookfield Asset Management, totaling an enterprise value of $1.4 billion.
The Mumbai Metropolitan Region (MMR) emerged as a frontrunner in attracting investments, securing $694 million in the initial nine months of FY24, compared to $375 million in the corresponding period in FY23. Foreign investors dominated the investment landscape, contributing 86% of the capital inflows in 9M FY24, up from 79% in 9M FY23. In contrast, domestic investments contracted to 14% of the total capital inflows, amounting to $360 million, in 9M FY24, down from $717 million in 9M FY23.
The report also highlighted a robust performance in the commercial office space during the April-December period of FY24, particularly in the top six cities. The sector exhibited resilience, with a shift in demand dynamics from the IT/ITeS sector to include contributions from manufacturing, BFSI, and co-working spaces. Additionally, a positive quarterly rental landscape was observed, with Bengaluru, Mumbai, and Chennai experiencing stronger rental growth in the 0-5% range. The report anticipates continued growth in the IT/ITES sector as more employees transition to working from offices for 3-4 days a week.