Private equity (PE) investments in the real estate sector fell 32 per cent to $4.3 billion in the last fiscal year, due mainly to the Covid-19 pandemic, according to property consultant Anarock.

PE investments in real estate stood at $6.3 billion in the 2020-21 financial year.

According to the FY22 year-end edition of Anarock Capital's FLUX report, PE inflows in real estate were $5.1 billion in FY'20, $5.6 billion in FY'19 and $5.4 billion in the 2017-18 fiscal.

The consultant attributed the fall in PE investments in real estate to the second wave of Covid-19, leading to multiple lockdowns in various parts of the country.

A recovery in PE investments in the real estate sector on the back of widespread vaccine coverage and improved market sentiment is expected.

Shobhit Agarwal, MD & CEO, Anarock Capital, said: "Equity continues to remain around 80 per cent of the total PE investments in Indian real estate."

The commercial sector attracted the highest investment in FY22 (38 per cent), followed by the industrial & logistics segment (22 per cent) and the residential segment (14 per cent), he added.

Investments by domestic funds jumped from $290 million in FY21, to $600 million during the last fiscal year.

"The increasing confidence of domestic funds reflects the return of overall positivity after a harrowing year of pandemic disruption and uncertainty," Agarwal said.

According to the report, the average deal size fell 42 per cent to $93 million in the last fiscal, from $161 million in the previous year.