PE investment in real estate at $2.7 billion in H1 2021: Savills India

Private equity investment inflows into the Indian real estate sector stood at $ 2.7 billion during first half of 2021, according to a report by Savills India.

This inflow is equivalent to 41 per cent of the investment that the sector saw in the entire year of 2020, an indication that investors’ confidence remains intact despite the pandemic-induced slowdown.

However, in the second quarter of 2021, Indian real estate market saw an investment of $865 million (₹6,300 crore) — a 54 per cent decline from the previous quarter.

The commercial office assets remained the frontrunner during Q2 2021, garnering about 40 per cent share of the investment pie. This is on the back of the resilience displayed by the investable grade office assets, reflected in the successful listing and operations of the three REITs in India.

Ivanhoe Cambridge of Canada to invest $100 million in Genome Valley

While occupancy levels in Embassy Office Parks REIT and Mindspace Business Parks REIT declined marginally by 1-2 percentage points at the end of March 2021 compared with those in December 2020, the rents remained stable during this period.

Brookfield India REIT executed a successful IPO with an 8 times subscription and strong participation from a diverse mix of marquee investors.

“Amid the ongoing pandemic, the first half of 2021 saw some marquee deals by both foreign and domestic investors in the commercial office segment. This demonstrates the strong inherent demand and resilience of the office market while reaffirming confidence of investors into the sector. We expect to see more such transactions in the near future as well,” Diwakar Rana, Managing Director, Capital Markets, Savills India, said in a statement.

REIT/InVITs: Lot size cut could be a game changer

During Q1 2021, the consumption pattern across investable grade retail assets displayed a positive picture as it recovered swiftly to pre-Covid levels of Q1 2020.

Savills India’s research witnessed a renewed interest in the retail segment by private equity institutional investors as the segment accounted for the second highest share (33 per cent) of investment inflows during Q2 2021. Foreign investors such as CPPIB and GIC formed platforms to invest $285 million (₹2,100 crore) in retail assets in Kolkata, Mumbai, and Pune.