PE investments in realty dips 56 per cent in Jan-Sept

Knight Frank India in its latest research report — 'Investments in Real Estate Trends in PE Investments Q3 2020' — recorded that Indian real estate attracted private equity investments of $2,308 million

Mumbai: As the pandemic has severely impacted investments, private equity investments into the Indian real estate sector has declined 56 per cent to $2.3 billion so far in 2020. Knight Frank India in its latest research report — ‘Investments in Real Estate Trends in PE Investments Q3 2020’ — recorded that Indian real estate attracted private equity investments of $2,308 million ($2.3 billionn), across 11 deals in January-September 2020.

During the corresponding period last year, private equity investments into the sector stood at $5.3 billion.

It noted that out of the total PE investments in real estate, office segment attracted the largest share of $1.87 billion, claiming 81 per cent share, followed by warehousing at 10 per cent and residential with 9 per cent. Shishir Baijal, chairman and managing director, Knight Frank India said: “Private equity investors have taken advantage of this period of economic slowdown to scout for Grade A assets with strong growth trends for investments. As a result of which assets in office segment saw positive investment activities.”

He noted that the average deal size for office investments was also seen to be remarkably higher during January-September 2020 as compared to full year 2019. “Globally, we see investors assessing the resilience and growth momentum of economies to make large scale investments. India’s economy, though impacted, is expected to see an accelerated recovery in the next few months,” Baijal said.

Rajani Sinha, chief economist and national director – research, Knight Frank India said: “We have witnessed healthy investor interest in the office segment despite the slowdown this year. While the investors are currently cautious due to the disruptions in the real estate sector and the sharp economic slowdown across global economies, we feel that the investor, interest in Indian real estate will remain strong in the long term.”

The report also assesses the assets owned by government of India’s Public Sector Units (PSUs) and estimates that the top 45 companies hold commercial properties viable for Real Estate Investment Trust (REIT) at a potential of over Rs 1.2 lakh crore.