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The real estate segment attracted private equity (debt + equity) investments of $3,241million across 19 deals in Q1 of 2021 (January – March) period, according to Knight Frank India research report.
During the period, investments in the sector grew 16 times compared to $199 million in Q1 of 2020. In value terms, investments were 80 per cent of that witnessed in full year 2020 and 48 per cent of full year 2019.
The strong momentum in Q1 2021 was due to two major factors: a spill-over of certain deals from 2020 and the rise in investor confidence due to the drop in Covid-19 infections during early parts of the quarter, which had created some ripples of positivity in the economy. The sustainability of the momentum in investors’ sentiments will, therefore, depend on how soon the second wave of infection subsides and also the pace of vaccination.
Of the total PE investments in real estate, the office segment attracted 71 per cent share, followed by retail at 15 per cent, residential and warehousing with 7 per cent each respectively.
Residential (debt + equity) real estate assets in Hyderabad received investments worth $11million with two major deals, whilst the 1.8 million sq ft of office space saw equity investment of $143 million.
Impressive surge
Shishir Baijal, Chairman and Managing Director, Knight Frank India, in a statement said, “The deal street market of Indian real estate witnessed an impressive surge in both value and volume of private equity investments in the first quarter of 2021, when compared to the entire year of 2020. Office assets continue to be the preferred segment attracting over 70 per cent investments in Q1 2021 as the segment moves towards maturity, which includes sustained demand, stability in rental income and change in ownership profile over long-term. Investors are expecting demand to recuperate faster as the pace of vaccination increases.”
Baijal said, “While Q1 2021 has been an encouraging quarter for PE investments, the upward trajectory can be impacted by the rising second wave of Covid-19 infections in India which started in the month of April 2021. The sustainability of revival in investor sentiments will depend on how soon the second wave of infection subsides and the pace of vaccination.”
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