Realty Sector Witnessed Private Equity Investments of $4,068 Million In 2020

The country attracted private equity investments to the tune of $ 38,149 million in the year 2020. Of the total PE investment, the real estate sector claimed 11 per cent share in 2020 with $ 4,068 million, closing 21 deals during the year. The share of office and warehousing PE investments have jumped remarkably over the last decade from 24 per cent in 2011 to 62 per cent in 2020 and 6 per cent to 24 per cent during the same period respectively.

“Despite a slowdown in overall PE investment, we continue to witness a strong investor appetite for rent yielding office assets. Knight Frank believes that with more clarity on the pandemic resolution and sense on structural changes, the deal activity is expected to pick up further in 2021,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India

Since 2011, the segment has garnered USD 16,213 mn of equity investments, and during 2020, the segment transacted seven deals amounting to USD 2,509 million. Around 21.8 mn sq ft of the office assets were transacted in 2020. The PE investments through equity route in this space were down 19% YoY in 2020 compared to USD 3,096 mn during the same period last year.

In terms of investor origin split, The United States of America leads the chart with USD 6,709 mn investment claiming 26 deals since 2011, followed by Singapore with USD 5,225 mn and Canada with USD 2,082 mn.

In 10 years, Jan 2011 –December 2020, Mumbai took the largest quantum of office investment worth USD 5,288 mn followed by the National Capital Region (NCR) with USD 2,803 mn and Hyderabad with USD 2,160 mn.

In 2020, the warehousing sector attracted PE investments through equity route worth USD 971 mn which were 49% YoY lower than USD 1,895 mn during the same period last year. This drop can largely be attributed to a significant percentage of capital committed to the warehousing sector in India over the past three years awaiting deployment. Since 2011 – 2020, Singapore has the largest share of investment of USD 2,524 mn in the warehousing sector, followed by UAE with USD 1,600 mn and Germany with USD 1,000 mn.

In 2020, the residential sector witnessed seven deals worth USD 368 million, which were down 49% YoY compared to USD 717 million in 2019. For several years residential prices have been stagnant and have even corrected at specific locations. Though overall PE investment (Debt and equity) in residential has come down in the past 4 years, investors’ risk appetite in residential has gone up as the share of equity investments has grown from 35% in 2019 to 52% in 2020.