PE investors bullish on Indian realty despite Covid blues

Improving economic sentiment, enabling policies and growth in key emerging sectors may help attract 30 per cent more private equity funds at $6 billion in the realty sector next year compared to 2020, says a report.

PE investments into the realty space is expected to dropped to $4.6 billion in 2020 due to decline in the overall economic activity hit by the pandemic-driven lockdowns, according to a report by global property consultancy Savills India.

The next wave of investments will be driven by warehousing, affordable housing and data centres apart from commercial office which will continue to see steady improvement, says the report.

A likely repair of the bruised economy, improving trade relations, policy support and progress on the vaccination front, are the key factors that would drive the sentiment henceforth and the sector may attract 30 per cent more PE funds in 2021 at $6 billion, says the report.

The warehousing and logistics segment have been among the most resilient asset classes during pandemic.

Warehouse leasing is seen rising 60 per cent in 2021 over 2020.

The agency expects $300 million, up 17 per cent more, of PE money flowing into the industrial and warehousing segment in 2021.

From 2000 to 2015 almost 60 per cent of PE money flew into the residential segment until the focus of fund managers shifted to ready office assets from 2014 and this segment has attracted around 40 per cent of the money.

The past two-three years have seen notable interest in newer asset classes like student housing, data centres, warehousing and opportunistic assets, notes the report.

Photograph: Rupak De Chowdhuri/Reuters