PE INFUSION IN REAL ESTATE TO RISE TO $6 BN IN 2021: REPORT
NEW DELHI: Private equity (PE) investment in real estate is estimated to fall 31% year-on-year (y-o-y) during 2020 to $4.6 billion due to an adverse impact of the Covid-19 on economic growth, according to property consultant Savills.
In its ‘Beyond The’20: Private Equity in India Real Estate’, Savills India expects the PE inflow to bounce back and grow by 30% in the next year to $6 billion.
“Savills Research anticipates private equity investments in real estate in 2020 to witness a significant contraction of about 30% as compared to 2019 at about $4.6 billion,” the report said. “Likely investment of $6 billion in 2021, a 30% y-o-y growth,” it added.
During the last one decade, Savills said the real estate investments have followed an overall segmental pattern—residential in the early phase, commercial and warehousing in the middle and alternate segments lately.
“Next wave of investments to be driven by quantum growth in warehousing, affordable housing and data centres; commercial office segment, meanwhile is expected to remain steady,” the report said.
However, the consultant said that policy support and steadfast implementation would be critical in gradual recovery of investment volumes back to a preCovid level.
“A likely repair of the bruised economy, improving trade relations, policy support and progress on the vaccination front, are the key factors which would drive the sentiment henceforth. The resultant push in PE investment could lead to $6 billion in 2021,” the report said. Savills said the warehousing segment is poised to consolidate its position as a high-preference asset class for PE investors.
Data centres as investment avenues are also likely to emerge strongly, it added. Private equity interest in commercial office investments and affordable housing is expected to retain preference as well.