PE investments in real estate to stay slow on macro woes

Private equity investments in the real estate sector remained stagnant in FY23 at $4.2 billion

- Priyal Mahtta

The pace of new private equity (PE) investments in India's real estate sector is likely to remain tepid in the near term due to global macroeconomic challenges but existing PE investors and domestic investors are likely to continue growing their exposure, industry executives said.

While marquee PE firms and PE-style investors based in the US and Canada such as Blackstone, Brookfield, Canada, Pension Plan Investment Board (CPPIB) and Caisse de dépôt et placement du Québec (CDPQ), are expected to remain invested, the likelihood of new foreign investors joining India's realty sector are low because of a high-interest rate regime, said Shobhit Agarwal, managing director and chief executive officer of Anarock Capital.

"While the longer-term prospects are promising, the near term may see muted activity on account of elevated interest rates (impacting valuations), global headwinds and upcoming national elections," Agarwal said.