In the first quarter of FY25, private equity deals in the Indian real estate sector witnessed a marginal increase, primarily driven by a significant investment in the warehousing assets of Reliance Retail.
"The largest private equity deal, worth approximately USD 1.5 billion between Reliance-ADIA-KKR, accounted for a substantial 71% of the total PE deals in Q1 FY25. In comparison, the top PE deal in Q1 FY24, involving Brookfield India RE Trust and GIC, was about USD 1.4 billion and represented a slightly higher 74% share of the total PE deals," stated Shobhit Agarwal, MD and CEO of ANAROCK Capital. The average deal size saw a year-on-year increase of 23%, primarily due to the Reliance Retail warehousing transaction.
Despite the current spike in deal value, foreign investor activity was lower on a moving average basis compared to previous levels.
This trend is attributed to a weak macro-economic environment and heightened geopolitical risks."Pure debt and pure equity transactions took a backseat this quarter, overshadowed by the substantial Reliance-ADIA-KKR deal," commented Aashiesh Agarwaal, SVP - Research & Investment at ANAROCK Capital. While Q1 FY24 transactions were heavily skewed towards office spaces due to the GIC-Brookfield deal, Q1 FY25 showed a marked alignment towards logistics.
As with Q1 FY24, foreign investors continued to dominate, while domestic investors remained on the sidelines. The residential segment experienced a softening of volumes compared to the previous quarter, mainly due to elevated prices and a high base from the previous quarter. However, year-on-year volumes were higher, indicating a robust overall trend. Mumbai and Pune led sales, accounting for over 50% of sales volumes.
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