According to Knight Frank India, the Indian real estate attracted private equity (debt and equity) investments of 3.24 billion dollars across 19 deals during January to March (Q1 2021), up 16 times compared to 199 million dollars in Q1 2020. The investments in Q1 2021 in value terms were 80 per cent of that witnessed in full year 2020 and 48 per cent of full year 2019, it said in its latest research report.
The strong momentum in private equity investment was partly due to spill over of certain deals from 2020. Also, rise in investor confidence due to drop in Covid-19 infections during early parts of Q1 2021, which had created some ripples of positivity in the economy. However, the sustainability of this momentum in investors’ sentiments will 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. The office market remained the preferred segment for investors due to the strong fundamentals (availability of large English speaking STEM talent, relatively low rentals, established knowledge outsourcing ecosystem) of the Indian office market. Since 2011, the segment has garnered 18.3 billion dollars of equity investments. In Q1 2021, the segment transacted seven deals amounting to 2.14 billion dollars. Around 31.5 million square feet of the office assets were transacted in Q1 2021.
Bengaluru took the largest quantum of office investment (equity) worth 1.5 billion dollars with three deals followed by Chennai-Hyderabad worth 415 million dollars in a single deal involving assets across the two cities. Hyderabad also has 143 million dollars from another deal and National Capital Region (NCR) with 62 million dollars from one deal.