India’s real estate sector accounted for 11 per cent of the total private equity investments last year, says a Knight Frank India report. India attracted private equity investments to the tune of $38,149 million in total last year out of which around $4,068 million involving 21 deals were in real estate sector.
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, India continued 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.
According to Rajani Sinha, Chief Economist & National Director of Research, Knight Frank India, after a temporary lull due to the global lockdowns in early 2020, India witnessed sharp resurgence in investor sentiments towards the end of the year. Interestingly, of the total $4.1 billion PE investment received by the Indian real estate sector, investments to the tune of $2.64 billion (64 per cent of annual investments) came in the last quarter of 2020.
Since 2011, on average investors invested through both debt and equity structures. However, there is a shift in investors’ risk appetite as 96 per cent of total PE investment was through the equity route in 2020. The trend is likely to continue in the near future, Sinha said.