PE investments in real estate dip 26% to $2.65 billion in April-December on global uncertainties, high interest rate: Report

Private equity investments in real estate fell 26 per cent annually to USD 2.65 billion in April-December period of this fiscal as foreign and domestic investors were cautious amid global uncertainties, according to Anarock.

The private equity (PE) inflow stood at USD 3.6 billion in the year-ago period.

Out of the total PE inflow, 84 per cent was in the form of equity, while the remaining in debt, Anarock Capital said in its report FLUX.

Shobhit Agarwal, MD & CEO, Anarock Capital, said, the share of foreign investors in total PE inflow has increased to 86 per cent as compared to 79 per cent in the year-ago period.

"Domestic investment shares decreased to 14 per cent of the total capital inflows into Indian real estate in the April-December period of FY24," he said.

Inflow from domestic investors fell to USD 360 million in the first 9 months of this fiscal compared to USD 717 million in the corresponding period of the previous year.

Anarock said PE investments declined as foreign and domestic investors reported lower activity.

Activity from foreign investors remained subdued for most of this period due to global geopolitical uncertainties and a high interest rate environment, it added.

"Domestic AIFs have seen lower activity levels as their favoured asset class 'residential real estate debt ' witnessed lower demand for high-cost funds," Agarwal said.

"Strong residential pre-sales and an accommodative stance by state-owned banks have led to reduced demand for capital from the more expensive alternate investment funds (AIFs)," he explained.

The average ticket size has marginally increased to USD 95 milion in April-December of FY24 from USD 91 million in the year-ago period.

This is largely due to a large deal in which Brookfield India Real Estate Trust REIT and Singapore's sovereign wealth fund GIC together acquired two commercial assets - one in Mumbai and the other in Gurugram, Delhi-NCR, from Brookfield Asset Management with an enterprise value of USD 1.4 billion.