PE investment ducks in Real Estate

Why PE Funds are investing less in Realty?

• According to Anarock, Private equity funding in the real estate sector fell 16% as compared to last fiscal to USD 3.67 billion on account of lower interest from foreign investors.
• In its report, Capital FLUX, real estate consultant Anarock pointed out that the private equity (PE) deals in Indian real estate have declined to USD 3,674 million in 2023-24 from USD 4,358 million in the previous year.
• In 2019-21, The PE inflow in real estate stood at USD 5,138 million and in 2021-22 it amounted to USD 6,377 million, $ 4,236 million in 2021-22 financial year.
• In 2019-20, PE flow in real estate stood at USD 5138 million which rose to USD 6377 million in 2002-21 and again declines to USD 4236 in 2021-22.
• The share of foreign capital in total investments dropped to 65% in FY24, against 76% in the previous year.
• Global macro-economic factors and geopolitical instability led the foreign investors with no major investment thereby pulling down the PE equity inflow for the segment, as elaborated by Anarock Capital.
• As per the report, PE investments by domestic investors have increased to 29 per cent of the total capital inflows into Indian real estate during the last fiscal as compared to 24 per cent in the previous year.
• As per the report, PE investments by domestic investors have increased to 29% of the total capital inflows into Indian real estate during the last fiscal as compared to 24% in the previous year.

Domestic investment soars

• Domestic investors, though manages to keep the PE investments stable at 29% of the total capital inflows into Indian real estate during the last fiscal as compared to 24% in the previous year.
• According to a report by Knight Frank India, a real estate advisory firm, PE investments in Indian real estate surged by 15% year-on-year (Y-o-Y) from USD 2.6 billion in the first half of 2023 to USD 3 billion in the first half of 2024,
• The warehousing sector dominated with 52% of total PE investments, backed by a single deal of USD 1.5 billion between Reliance Retail, Abu Dhabi Investment Authority (ADIA), and Kohlberg Kravis Roberts & Co. (KKR). This was followed by residential at 29% and office at 20%.
• If we were to look at statewise investment map, Mumbai led the investment radar with USD1.701 billion, followed by Bengaluru and Hyderabad.

Editor’s Note