PE investments in real estate down 40% at $4.06 billion in 2020

The pandemic played spoilsport

Private equity investments in real estate fell 40 per cent year-on-year to USD 4.06 billion in 2020 because of the COVID-19 pandemic, according to Knight Frank India.

Private equity (PE) investments in 2019 stood at nearly USD 6.8 billion.

"India attracted private equity investments to the tune of USD 38,149 million in the calendar year 2020. Of the total PE investment, the real estate sector claimed 11 per cent share in 2020 with USD 4,068 million, closing 21 deals during the year," Knight Frank said in a statement.

As per the data, investments in office assets fell to USD 2,509 million last year from USD 3,258 in 2019.

In retail real estate, the inflows declined to USD 220 million from USD 922 million. PE investment in warehousing decreased to USD 971 million from USD 1,895 million.

The residential real estate segment saw an inflow of USD 368 million in 2020 as against USD 717 million in the previous year.

"Despite a slowdown in overall PE investment, we continue 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," said Shishir Baijal, chairman and managing director, Knight Frank India.

Rajani Sinha, chief economist and national director research, Knight Frank India, said the country witnessed sharp resurgence in investor sentiments towards the end of the year, after a temporary lull due to the global lockdowns in early 2020.

"The real estate sector in India witnessed private equity investments to the tune of USD 4.1 billion in 2020 of which USD 2.64 billion (64 per cent of annual investments) came in the last quarter of 2020," she said.

Since 2011, investors are putting money through both debt and equity structures.

However, Sinha said there is a shift in investors' risk appetite as 96 per cent of total PE investment was through the equity route in 2020.