Private equity investment in real estate more than triples in H1 2021

PE inflows stood at $2,729 million in the first half of 2021 as against $870 million in January-June 2020

New Delhi: Private equity (PE) investment in real estate jumped over threefold year-on-year to $2.7 billion (Rs 14,300 crore) in the first six months of this calendar year mainly driven by rising demand for commercial assets, according to property consultant Savills India.

PE inflows stood at $2,729 million in the first half of 2021 as against $870 million in January-June 2020, it said. “PE investment inflows into the Indian real estate sector amounted to USD 2.7 billion (INR 143 billion) during H1 2021,” Savills said in a report.

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During the entire 2020, PE inflow was $6.6 billion. The jump in PE inflows indicates that investors’ confidence remains intact despite the pandemic-struck slowdown period. “However, with USD 865 million (INR 63 billion) of inflows during Q2 2021, we witnessed a decline of 54 per cent QOQ,” it said.

Despite the prevalence of remote-working culture, commercial office assets remained the frontrunner during Q2 2021, garnering about 40 per cent share of the investment pie. “This is backed by resilience displayed by the investable grade office assets in these difficult times, as reflected in the successful listing and operations of the three REITs in India,” the report said.

During Q1 2021, the consumption pattern across investable grade retail assets improved and recovered swiftly to pre-COVID levels of the Q1 of the 2020 calendar year. “We witnessed a renewed interest in retail segment by private equity institutional investors as the segment accounted for the second-highest share (33 per cent) of investment inflows during Q2 2021,” the consultant said.

Foreign investors such as CPPIB and GIC formed platforms to invest to the tune of $285 million in retail assets in the cities of Kolkata, Mumbai, and Pune, the report highlighted.

“Amid the ongoing pandemic, the first half of 2021 saw some marquee deals by both foreign and domestic investors in the commercial office segment. This demonstrates the strong inherent demand and resilience of the office market while reaffirming confidence of investors in the sector,” Diwakar Rana, MD, Capital Markets, Savills India said.