Between April and June, private equity investment in the real estate market fell 5% to $1.9 billion

Because of high interest rates, private equity (PE) investments in real estate fell 5% year over year to $1.9 billion in April–June, according to Anarock.

PE inflows were $2 billion in the same time last year.

‘FLUX Q1 FY24 Market Monitor for Capital Flows in Indian Real Estate’ is a study published by real estate consultancy Anarock.

Given the high borrowing rates, PE activity slightly decreased by 5% in the first quarter of FY24, according to the study.

PE inflows totaled $1.4 billion, $0.2 billion, and $1.7 billion in the first quarters of 2021–2022, FY21, and FY20, respectively.

According to the report, local funds made up just 6% of PE investments, while 94% of them were made by international investors.

Equity continued to dominate PE financing, accounting for 94% of the overall inflow.

“Overall activity remained muted,” Anarock said, “with headline numbers boosted by a large single deal with assets across locations.”

Two commercial buildings in India will be purchased for $1.4 billion via a collaboration between Singapore’s GIC and Brookfield India REIT (BIRET), which was announced in May.

90% of the overall inflow between April and June came from office assets. 68% of the PE inflow during the prior quarter came from office assets.

“Excluding this deal, private equity activity remained subdued due to a high interest rate environment and global uncertainties,” stated Shobhit Agarwal, MD & CEO of Anarock Capital.

“PE transactions in Indian real estate are already skewed towards foreign investors’ equity investments in office properties. The one significant transaction between the consortium of GIC and Brookfield REIT with Brookfield AMC during the quarter significantly distorted the mix, according to Agarwal.

Inflows into the residential market were just 6% in Q1 FY24 compared to 19% in the same quarter last year.

The modest decrease in PE investment between April and June, according to Gagan Randev, Executive Director of India Sotheby’s International Realty, may be ascribed to the temporary slowdown and disturbances in the global economy.

But this is anticipated to be a brief period, and we foresee a rise in PE investment in the next quarter. A bright future is indicated by India’s strong economic growth, increased demand for Grade A office space, a quick resurgence in retail, and significant storage demand after Covid, according to Randev.

According to Anarock statistics, during 2022–2023, PE investment in real estate was constant at $4.2 billion.

PE investments were $4.2 billion in 2021–2022; $7.2 billion in 2020–2021; $6.3 billion in 2019–2020; and $5.3 billion in 2018–19.