The subsequent wave of investments will be driven by development in warehousing, economical housing and information centres apart from the industrial workplace segment which will continue to see steady improvement, stated the report Beyond The’20: Private Equity in Indian Real Estate. A most likely repair of the bruised economy, enhancing trade relations, policy assistance and progress on the vaccination front are the important components that would drive the sentiment henceforth.
Savills India’s estimates for private equity investment in the sector are primarily based on components like general financial and infrastructure development, development in sectors such as manufacturing, logistics and e-commerce. Geopolitical situation and policy enabling atmosphere are also deemed to be important determinants.
While PE investment in genuine estate in 2020 is anticipated to contract at $4.6 billion due to decline in financial activity, investors are most likely to adapt themselves in the altered planet order and steadily return to the industry with evolved techniques.
As per the report, the warehousing and logistics segment has been amongst the most resilient asset classes in the ongoing pandemic. Warehouse leasing is anticipated to boost by 60% in 2021 as compared to 2020, maintaining investors riveted and on the lookout for investment possibilities.
Savills Research also expects private equity investors to assess an chance of about $330 million in the industrial and warehousing segment in 2021. This is roughly 17% larger compared to the typical annual investments in the course of the period of 2016-2020.
“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 alternate asset classes in real estate,” stated Anurag Mathur, CEO, Savills India.
From 2000 to 2015, just about 60% of PE investment was in the residential segment till the concentrate of fund managers shifted to prepared workplace assets supported by buoyant demand from 2014 onwards and the segment has attracted approximate 40% of investment. Interestingly, the final 2-3 years have observed notable interest in newer asset classes such as student housing, information centres, warehousing and opportunistic assets.
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“For the investor community and private equity players, the warehousing segment is becoming an asset class of choice in times ahead. While the leasing activity in the industrial and warehousing segment has declined year-on-year, we expect rentals to see a steady rise as quality supply gets added to the stock. The world of private equity would be aiming for some of their most lucrative opportunities in the time to come,”
-stated Diwakar Rana, Managing Director, Capital Markets, Savills India.