Private equity investment in real estate is expected to bounce back to $6 billion, registering a 30 per cent year-on-year growth in 2021 on the back of an improving economic sentiment supported by policy reforms and growth in key emerging sectors.

The PE investment in real estate this year is expected to contract at $4.6 billion due to decline in economic activity, investors are likely to adapt themselves in the altered world order and steadily return to the market with evolved strategies.

Also read: PE-VC investments fell by 8% in January-November

According to the report by Savills India, a global property consultancy firm, the next wave of investments will be driven by growth in warehousing, affordable housing and data centres apart from the commercial office segment that will continue to see improvement.

In its report Beyond The’20: Private Equity in Indian Real Estate, it states that a likely repair of the bruised economy, improving trade relations, policy support and progress on the vaccination front are the key factors that would drive the sentiment henceforth.

Warehousing and logistics segment

As per the report, the warehousing and logistics segment has been among the most resilient asset classes in the ongoing pandemic. Warehouse leasing is expected to increase by 60 per cent in 2021 as compared to 2020, keeping investors riveted and on the lookout for investment opportunities.

Savills Research also expects private equity investors to assess an opportunity of around $330 million in the industrial and warehousing segment in 2021. This is approximately 17 per cent higher compared to the average annual investments during 2016-20.

“2020 has been a watershed year for businesses and industries across the globe. Indian economy has weathered this unprecedented crisis fairly well, which is indicative of its strong inherent fundamentals. Going forward, policy steadfastness and implementation will hold the key to revival of investment. In our view, the investors will proceed with caution in early days, but 2021 is likely to experience a fair amount of PE investment owing to inherent strengths and potential of alternative asset classes in real estate,” Anurag Mathur, CEO, Savills India, said in a statement.

Also read: Leasing by co-working operators to rise 42% in 2021: Savills India

From 2000 to 2015, almost 60 per cent of PE investment was in residential segment until the focus of fund managers shifted to ready office assets supported by buoyant demand from 2014 onwards and the segment has attracted approximate 40 per cent of investment.

“The government has been taking steps to create an enabling business environment and boost investments. Both foreign and domestic investors are relooking at some of the untapped areas of investment and have reposed faith across sectors, including real estate,” Arvind Nandan, Managing Director, Research & Consulting, Savills India, said.

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