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In the first half of 2024, private equity (PE) investments in the Indian real estate sector dropped 4% to USD 2.3 billion, mainly due to reduced investments in office properties. Global factors like high interest rates and political tensions impacted foreign investments, affecting overall PE activity. However, investments remained stable due to a major warehousing deal involving Reliance, ADIA, and KKR, which made up 67% of total investments. Industrial and logistics assets attracted 67% of all investments, significantly surpassing office and residential sectors at 17% each, while foreign investors accounted for 87% of the total investments.
The Indian real-estate sector has witnessed a 4% drop in private equity investments in the first half of 2024. The investments fell to about USD 2.3 billion, with real-estate consulting firm Anarock attributing the drop to fewer investments in office properties. Advertisement
Anarock revealed that the frequency of transactions for this year between April to September was around 17, compared to 24 for the same period in the previous year, highlighting a significant decrease.
Managing Director and CEO of Anarock, Shobhit Agarwal, pointed out that PE investments are fueled by global and foreign investors, and global issues such as high interest rates and political conflicts have contributed to the decline in investments from abroad. He remains optimistic, however, since the overall investment numbers and strong presence of foreign investors in the Indian market has stayed relatively stable because of the investments made by ADIA and KKR in Reliance Retail.
The average size of transactions has increased by 23% each year. For the first half of FY 2020-21, PE investments were worth around USD 1.2 billion, rising to USD 2 billion for the same period in FY 2021-22, USD 2.8 billion for the next financial year, and USD 2.4 billion for the Apr-Sept period in FY 2023-24. The fiscal year 2024-25 saw its first drop in the last three years.
These PE investments are mainly because of the large warehousing deal between Reliance, ADIA, and KKR, which comprised about 67% of all the investments in the first half of the present fiscal year. Data from Anarock highlighted that around 87% of all investments under review were by foreign investors.
During this time, industrial and logistics properties (like warehouses) received 67% of all the investments, far more than the office and residential sectors, which each received only 17%. Despite PE investments in the office sector decreasing by 79% from the previous year, investments in the industrial and logistics sector shot up by a whopping 378%.
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