Real estate transactions fall by 71% in 2024Q3; what's driving the decline?

The sharp fall in transaction value can be attributed to the absence of large-scale deals, said the Grant Thornton report

The real estate sector experienced a substantial drop in transactions during the third quarter of 2024, with a 71 per cent sequential decrease and a 41 per cent annual fall, amounting to $452 million, according to a report by Grant Thornton.

Lack of major deals behind fall

The sharp fall in transaction value can be attributed to the absence of large-scale deals, in contrast to the same quarter last year when just four major deals made up 85 per cent of the total value.

However, the number of deals saw a slight 5 per cent rise compared to the previous quarter and a 54 per cent increase year-on-year. The report covered mergers and acquisitions (M&A) as well as private equity investments. Including IPOs and qualified institutional placements (QIPs), total activity for the quarter reached $1.4 billion.

 

Despite the overall decline, there was a slight uptick in activity towards the end of the quarter, suggesting a possible resurgence in momentum as the year progresses, added the Grant Thornton report.

Private equity dominates deals

Private equity deals dominated the quarter, with $401 million generated from 12 transactions. While this represents a decrease compared to the previous quarter, it still surpasses deal values seen in Q1 and the same period last year. One of the largest transactions involved Singapore’s Keppel Corp acquiring One Paramount from RMZ Corp in Chennai.

M&A activity during the quarter reached $51 million, with domestic consolidations continuing to play a key role. The report highlighted three inbound deals in property development and two outbound deals in student housing and online rental platforms.

The report also noted a shift in investment focus towards warehouses, logistics parks, and student rentals, with increasing interest in real estate technology companies. For instance, the Lodha Group completed five acquisitions worth $40 million in this sector.

Commercial development accounted for 60 per cent of the total deal value, contributing $386 million.