PE investment in real estate falls 89% to USD 222 mn in Jan-March: Report

Colliers asked investors to explore opportunities in logistics and data centres as well as core commercial office assets

CII, business, real estate
The consultant projected that total PE investment in real estate could drop to USD 3.5 billion in the calendar year 2020 from USD 6.4 billion last year. Photo: iStock

Private equity (PE) investment in Indian real estate plunged 89 per cent to USD 222 million (Rs 1,640 crore) during the January-March period this year on global economic slowdown caused by the coronavirus outbreak, according to a report by Colliers International.

PE inflows in real estate had stood at USD 2,023 million in the corresponding period a year ago. The consultant projected that total PE investment in real estate could drop to USD 3.5 billion in the calendar year 2020 from USD 6.4 billion last year.

Out of USD 222 million inflow in the first three months of this year, the office market attracted an investment of USD 143 million while the hospitality sector USD 79 million.

During the January-March period of 2019, inflows in the office market stood at USD 1,419 million, housing USD 300 million, logistic USD 150 million, mixed-use projects USD 102 million and retail USD 52 million, the data showed.

“The current slowdown has resulted in reduced private equity inflows into the Indian real estate market. Overall private equity inflows dropped by 62 per cent quarter-on-quarter and 89 per cent year-on-year to stand at USD 222 million (Rs 1,640 crore) in Q1 2020,” Colliers International said in a report.

Considering the COVID-19 outbreak, the consultant expects slower decision making by investors in the first half of 2020, which could constrain capital deployment in India. Colliers asked investors to explore opportunities in logistics and data centres as well as core commercial office assets.

“Distressed assets, especially in the hospitality and retail space, are also attractive,” it said. “We expect opportunistic asset trade transactions to gain pace in the next 2-3 years as the Insolvency and Bankruptcy Code 2016 (IBC 2016) becomes more established,” it said.

Colliers International, which is listed on Nasdaq, is a leading real estate professional services and investment management company. It has operations in 68 countries with more than 15,000 headcount. In 2019, corporate revenues were more than USD 3 billion (USD 3.5 billion including affiliates), with USD 33 billion of assets under management in its investment management segment.

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