Private equity investment in real estate is expected to bounce back to $6 billion, registering a 30% year-on-year growth in 2021 on the back of an improving economic sentiment supported by policy reforms and growth in key emerging sectors, Savills India, a global property consultancy firm, said in a report.
The next wave of investments will be driven by growth in warehousing, affordable housing and data centres, apart from the commercial office segment which will continue to see steady improvement, the report ‘Beyond The ’20: Private Equity in Indian Real Estate’ said.
Savills India’s estimates for private equity investment in the sector are based on factors like overall economic and infrastructure growth, growth in sectors such as manufacturing, logistics and e-commerce. Geopolitical scenario and policy enabling environment are also considered to be key determinants, as per the realty consultancy firm.
While PE investment in real estate in 2020 is expected to contract at $4.6 billion due to a decline in economic activity, investors are likely to adapt themselves in the altered world order and steadily return to the market with evolved strategies, it said.
As per the report, the warehousing and logistics segment has been among the most resilient asset classes in the ongoing pandemic. Warehouse leasing is expected to increase by 60% in 2021 as compared to 2020, keeping investors riveted and on the lookout for investment opportunities.
Savills Research also expects private equity investors to assess an opportunity of about $330 million in the industrial and warehousing segment in 2021. This is approximately 17% higher compared to the average annual investments during 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. 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,” said Anurag Mathur, CEO, Savills India.