In the first half of FY24, private equity investments in the Indian real estate sector experienced a notable shift. The ANAROCK Capital report "FLUX - 1H FY24" revealed an increase in the average investment size to USD 117 million, primarily driven by a massive deal involving Brookfield India Real Estate Trust REIT and Singapore's GIC. Despite subdued overall investment activity, the top 10 deals accounted for 95% of total PE investments. Office assets, especially Grade-A properties, remained a top choice for investors. Emerging trends included growing interest in data centres and continued debt investments in the luxury residential sector. Equity investments dominated, and multi-city transactions, particularly in Mumbai, surged. The sector showed resilience, with promising opportunities for both domestic and foreign investors.
In the first half of FY24, private equity (PE) investments in the Indian real estate sector witnessed a notable shift. According to the latest ANAROCK Capital report titled "FLUX - 1H FY24", the average investment size surged to USD 117 Mn, up from USD 100 Mn in the same period the previous year.
A significant contributor to this increase was a mega-deal involving Brookfield India Real Estate Trust REIT and Singapore's GIC. The duo acquired two commercial assets in Mumbai and Gurugram from Brookfield Asset Management, valuing the transaction at a whopping USD 1.4 Bn.
Despite this, the overall investment activity appeared subdued. A closer look reveals that the top 10 deals made up a staggering 95% of the total PE investments in 1H FY24, a rise from 81% in 1H FY23. Office assets, especially Grade-A ones with premium tenants, were the primary attraction for investors.
Emerging trends also indicate a growing interest in data centres as an investment avenue, with a recorded value of USD 73 Mn. The residential real estate sector, particularly the luxury segment, continues to attract significant debt investments, even amidst economic challenges.
Equity remains the investment mode of choice, capturing a healthy 89% share. Interestingly, domestic investments saw a 9% increase, reaching USD 274 Mn in 1H FY24. In contrast, foreign investments dipped slightly to 88% from 91% in the previous year.
Multi-city transactions, led by the Brookfield-GIC deal, saw a sharp uptick. Mumbai, in particular, reported investments of USD 543 Mn, a significant leap from USD 307 Mn in 1H FY23. The commercial real estate sector also experienced a boost, accounting for 78% of the investments in 1H FY24, up from 56% in 1H FY23.
The latter half of 1H FY24 brought some stability, especially in cities like Bengaluru, Hyderabad, and Chennai, driven primarily by the tech and manufacturing sectors. However, challenges persist. Landlords have delayed completions due to previous weak demands, impacting new supplies. Rentals in Bengaluru and Hyderabad have seen an increase, while vacancies remain high in cities like Gurugram and Noida.
On the retail front, international brands are eyeing the Indian market, with several announcing plans to establish outlets. Domestic retail operators are also experiencing robust growth, especially in Tier II and Tier III cities.
In conclusion, while the first half of FY24 saw a mix of highs and lows, the Indian real estate sector remains resilient. With evolving trends and strategic investments, the future looks promising for both domestic and foreign investors.
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