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Real Estate Got PE Investments Of $4,068 Mn In 2020: Knight Frank India

Leading property consultancy, Knight Frank India, said that of the total Private Equity (PE) Investment in India in 2020, the Real Estate Sector cornered the real estate sector a 11 per cent share amounting to $4,068 million with 21 deals closed.

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Leading property consultancy, Knight Frank India, said that 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% share in 2020 with USD 4,068 million, closing 21 deals during the year. The share of office and warehousing PE investments have jumped remarkably over the last decade from 24% in 2011 to 62% in 2020 and 6% to 24% during the same period respectively.


Source: Knight Frank Research, Venture intelligence

Note: A USD 1.7 bn deal in the commercial real estate (office and retail) segment is not captured in 2020. With more details awaited on the allocation of specific asset class, it will be considered in subsequent reporting period.

Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “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.”  

Rajani Sinha, Chief Economist & National Director – Research, Knight Frank India said, “After a temporary lull due to the global lockdowns in early 2020, India witnessed sharp resurgence in investor sentiments towards the end of the year. 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% of annual investments) came in the last quarter of 2020. Since 2011, on average investors invested through both debt and equity structures; however, there is a shift in investor’s risk appetite as 96% of total PE investment was through the equity route in 2020. We believe the trend will continue in the near future.”

Trends in PE (Equity Only) Investments in Office Assets 

Since 2011, the segment has garnered USD 16,213 mn of equity investments, and during 2020, the segment transacted seven deals amounting to USD 2,509 million. Around 21.8 mn sq ft of the office assets were transacted in 2020. The PE investments through equity route in this space were down 19% YoY in 2020 compared to USD 3,096 mn during the same period last year.

In terms of investor origin split, The United States of America leads the chart with USD 6,709 mn investment claiming 26 deals since 2011, followed by Singapore with USD 5,225 mn and Canada with USD 2,082 mn.

In 10 years, Jan 2011 –December 2020, Mumbai took the largest quantum of office investment worth USD 5,288 mn followed by the National Capital Region (NCR) with USD 2,803 mn and Hyderabad with USD 2,160 mn.

Source: Knight Frank Research, Venture intelligence

Note: * Investment in office assets across these 3 cities in a single deal

Trends in PE (Equity Only) investments in Warehousing assets

In 2020, the warehousing sector attracted PE investments through equity route worth USD 971 mn which were 49% YoY lower than USD 1,895 mn during the same period last year. This drop can largely be attributed to a significant percentage of capital committed to the warehousing sector in India over the past three years awaiting deployment. Since 2011 – 2020, Singapore has the largest share of investment of USD 2,524 mn in the warehousing sector, followed by UAE with USD 1,600 mn and Germany with USD 1,000 mn.  

Source: Knight Frank Research, Venture intelligence 

Trends in PE (Debt + Equity) Investments in Residential Assets

In 2020, the residential sector witnessed seven deals worth USD 368 million, which were down 49% YoY compared to USD 717 million in 2019. For several years residential prices have been stagnant and have even corrected at specific locations. Though overall PE investment (Debt and equity) in residential has come down in the past 4 years, investors' risk appetite in residential has gone up as the share of equity investments has grown from 35% in 2019 to 52% in 2020.


Source: Knight Frank Research, Venture Intelligence 

Trends in PE (Equity Only) Investments in Retail Assets

Since 2011, the retail space has attracted USD 2,792 mn equity investments, claiming total of 25 deals as of 2020.  There were only two deals transacted for USD 220 mn in retail space in 2020 which is a drop of 76% YoY compared to USD 922 mn in 2019.  The pandemic-induced lockdown had forced all malls to halt their operations and has adversely affected their businesses. Malls have been amongst the last to open during the unlocking phases and the fear of virus has kept the consumer footfalls low. Such high levels of uncertainty have kept investors away from retail assets. Around 2.7 mn sq ft of the retail space was transacted in 2020.

Source- Knight Frank Research, Venture intelligence