PE Investment In Realty Sector Tanked 62% In Q1 Of 2020
New Delhi: The private equity (PE) investment in real estate sector in India tanked 62 percent in the first quarter (Q1) of 2020.
Due to the slowdown in the Indian economy an also due to the corona pandemic,, the overall PE investment in real estate was just USD 222 million in Q1 of 2020, according Colliers International India.
The corona pandemic and lower GDP growth in India, among other factors, have changed the investment outlook for 2020. Thus the projection of PE inflows in real estate sector is expected to go down USD3.5 billion in 2020. However, the altering market situation presents many opportunities in income generating commercial office assets, housing projects and opportunistic assets.
There has been sharper focus by PE investors in acquiring opportunistic assets in India. In the five quarters of 2019-Q1 2020 (four quarter of 2019 and the Q1 of 2020), the hospitality sector in India saw USD754 million (INR56 billion) of investment inflows but almost all the investment was for distressed asset trade transactions. This is about eight times in investment that went in the hospitality sector in the preceding five quarters.
“The opportunity lies in logistics and data centers as well as core commercial office assets. Distressed assets, especially in the hospitality space, are also attractive. The opportunistic asset trade transactions are expected to gain pace in the next 2-3 years with the current economic slowdown”, said Sankey Prasad, Managing Director and Chairman at Colliers International India.