Indian real estate PE deal value plummets 30% to $3.7 billion: Anarock

The total value of private equity (PE) deals in Indian real estate dropped by nearly 30% to $3.7 billion in fiscal year 2024 (FY24), down from $5.1 billion in FY20, as per a report released by Anarock Capital. This decline represents a 16% decrease from the $4.3 billion recorded in FY23.

The "FLUX: FY24 Annual Edition" report by Anarock Capital revealed that FY21 marked the highest value of PE deals in the past five years, reaching $6.4 billion. Notably, in FY24, a single deal between Brookfield India REIT and GIC valued at $1.4 billion accounted for 40% of the total deal value.

Shobhit Agarwal, the managing director and chief executive officer at Anarock Capital, states, “The decline in PE investments in Indian real estate 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,” he adds.

Agarwal noted a shift in investment dynamics, with the share of foreign capital decreasing from 78% in FY20 to 65% in FY24, while domestic investors' contribution increased from 8% to 29% during the same period.

The Anarock report highlighted that although the number of deals increased from 48 in FY20 to 49 in FY24, the total deal value declined due to a significant drop in average deal size, decreasing by 30% from $107 million in FY20 to $75 million in FY24.

Commercial office spaces remained the primary interest for PE investors, comprising 57% of the total value share of PE transactions in FY24, followed by residential properties at 28%, and industrial and logistics at 9%. Agarwal explained that while there was a consistent 28% share of PE investments in residential real estate annually, there was a 17% yearly decline in value, primarily attributed to an exceptionally high base in FY23 when investments had doubled compared to previous years.

“Equity investments are preferred by PE investors which is visible from the fact that its share continues to be healthy and at par with the average of ~75% in the past 5 years,” the report adds.