Mumbai: Amid revival in housing demand, the residential segment witnessed private equity (PE) investments worth $234 million in Q1 2021 which was 64 per cent of that witnessed during the entire 2020, said a Knight Frank India report.
It noted that in terms of the number of deals, the investment activity touched 100 per cent of 2020 levels and 39 per cent of 2019 levels in the first three months of 2021.
The report titled 'Investments in Real Estate - Trends in PE Investment (Q1 2021 update)' said that Indian real estate attracted private equity (debt and equity) investments ($3.24 billion) across 19 deals in Q1 2021 (January - March) period.
In the first quarter of 2021, the investment in the sector has grown by 16 times compared to $199 million in Q1 2020.
The investments in Q1 2021 in value terms were 80 per cent of that witnessed in full year 2020 and 48 per cent of full year 2019.The strong momentum in Q1 2021 was predominantly driven by two major factors, spillover of certain deals from 2020 and the rise in investor confidence due to the drop in Covid-19 infections during early parts of Q1 2021, which had created some ripples of positivity in the economy, it said.
The sustainability of this momentum in investors' sentiments will therefore depend on how soon the second wave of infection subsides and also the pace of vaccination, as per the Knight Frank India.
Out of the total PE investments in real estate, the office segment attracted 71 per cent share, followed by retail at 15 per cent, residential and warehousing with 7 per cent each respectively.
Shishir Baijal, Chairman and Managing Director, Knight Frank India said: "The deal street market of Indian real estate witnessed an impressive surge in both value and volume of private equity investments in the first quarter of 2021, when compared to the entire year of 2020."
He said that office assets continue to be the preferred segment attracting over 70 per cent of PE investments Q1 2021 as the segment moves towards maturity which includes sustained demand, stability in rental income and change in ownership profile over long -term. Investors are expecting demand to recuperate faster as the pace of vaccination increases.
"While Q1 2021 has been an encouraging quarter for PE investments, however, the upward trajectory can be impacted by the rising second wave of Covid-19 infections in India which started in the month of April 2021. The sustainability of revival in investor sentiments will therefore depend on how soon the second wave of infection subsides and the pace of vaccination," Baijal said.
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