Private equity investment inflows into the Indian real estate sector stood at $2.7 billion during the first half of 2021 as investors’ confidence remained intact despite the pandemic-induced slowdown, showed a report from property consultant Savills India.
This inflow is equivalent to 41 per cent of the investment that the sector saw in the entire year of 2020. However, in the second quarter of 2021, Indian real estate market saw an investment of $865 million, a 54 per cent decline from the previous quarter.
Commercial office assets remained the frontrunner during the quarter, 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.
While occupancy levels in Embassy Office Parks REIT and Mindspace Business Parks REIT declined marginally by 1-2 per cent points at the end of March 2021 as 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, with 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. Consistent performance by some of the large foreign institutional firms in core assets has shown global investors the potential scope of investing in Indian real estate. We expect to see more such transactions in the near future as well,” said Diwakar Rana, Managing Director, Capital Markets, Savills India.
During the first quarter of 2021, the consumption pattern across investable grade retail assets displayed a positive picture as it recovered swiftly to pre-COVID levels of Q1 2020, the report said.
A renewed interest in the retail segment by private equity institutional investors was witnessed as the segment accounted for the second highest share of around 33 per cent of investment inflows during the second quarter of 2021. Foreign investors such as CPPIB and
formed platforms to invest to the tune of $285 million in retail assets in the cities of Kolkata, Mumbai, and Pune.