Why have PE investments declined?

Private equity (PE) investments in the domestic real estate sector declined by 26 percent in the first nine months of the financial year 2023–24. As a result, it was limited to only 2.65 billion dollars during the April–December period. Anarock stated that due to international uncertainties, domestic and foreign investors have been cautious.

In the first nine months of last year (2022–23), 3.6 billion dollars were invested in the country’s real estate sector, but this financial year has declined by 26 percent. In a report released under the name of Flux, Anarock said that 84 percent of the newly registered PE investments were obtained in the form of equity, while the remaining funds were provided as loans. The share of foreign investors in the total PE investments increased from 79 percent to 86 percent. At the same time, the share of domestic investment decreased by 14 percent.

Investments from domestic investors have halved to $36 crore. In the first nine months of last year, 71.7 crore dollars were invested in real estate. Anarock stated that overall PE investments in real estate have decreased due to the weakening of domestic and foreign investor transactions. It explained that foreign investors’ transactions have slowed down due to the environment of international uncertainties and high-interest rates. Transactions from domestic alternative investment funds (AIFs) declined as demand for the residential realty lending segment fell due to cost-effective funds.