Even as private equity (PE) investment in Indian actual estate in 2020 is anticipated to contract by 30% year on year to $4.6 billion (about Rs 3,384 crore), investor interest in the sector is probably to revive in the coming calendar year on the back of government policy assistance amongst other measures, with segments like warehousing, information centres and reasonably priced housing anticipated to attract development.
Savills India mentioned in a report, “A likely repair of the bruised economy, improving trade relations, policy support and progress on the vaccination front, are the key factors which would drive the sentiment henceforth. The resultant push in PE investment could lead to $6 billion in 2021 as per Savills Research.”
The subsequent wave of investments will be driven by development in warehousing, reasonably priced housing and information centres, apart from the industrial workplace segment, which will continue to see steady improvement, it mentioned.
Warehousing and logistics has been amongst the most resilient asset classes through the pandemic. Warehouse leasing is anticipated to develop 60% year on year in 2021, maintaining investors riveted and on the lookout for investment possibilities.
Savills Research also expects PE investors to assess an chance of about $330 million in the industrial and warehousing segment in 2021. This is about 17% larger compared to the typical annual investments from 2016 to 2020.
From 2000 to 2015 virtually 60% of PE investment was in the residential segment, till fund managers shifted concentrate to prepared workplace assets supported by buoyant demand from 2014 onwards, and the segment has attracted about 40% of investment. The final two to 3 years have noticed notable interest in newer asset classes like student housing, information centres, warehousing and opportunistic assets.
At the other finish of the spectrum, retail investments witnessed a dwindling pattern even in the pre-pandemic period, mostly due to ever escalating adoption of e-commerce by Indian customers and lack of incremental provide of premium good quality retail malls in key cities. New mall completions lowered by virtually 50% in 2015-19 from the preceding 5-year period.
Going forward, having said that, investor interest ought to enhance, as it hinges considerably on planned provide and distress chance acquisition, each of which are considerable at present.
“Office space investors are likely to chase value-add and opportunistic deals for higher returns. Grade-A office spaces with marquee clients will remain favourites. Last mile funding is expected to revive stuck projects in the residential segment. Distressed purchase of assets in retail and hospitality sector is another trend that is likely to witness a spurt in the post pandemic era,” the report mentioned.
A important element in assessing the viability of acquisition of distressed assets would include things like influence evaluation upon expiry of each the loan moratorium relief and short-term suspension of fresh insolvency proceedings as effectively, it mentioned.