- Investment has been reduced in PE Real Estate due to COVID-19 outbreak
- This has created immense opportunity for residential segment and for opportunistic assets, especially in hospitality sector
The outbreak of COVID-19 and slower economic growth among other factors have altered the investment outlook for 2020. Hence, private equity inflows in real estate lowered to about $3.5 billion in 2020 owing to slow decision-making by investors in H1 of 2020 is foreseen.
Private equity real estate investment in India stood at Rs 1,640 crore in the first quarter of 2020, registering a drop of 62 percent quarter-on-quarter on account of the slowing economy and the COVID-19 outbreak, according to a report by Colliers International India. Colliers witnessed increased investor focus on acquiring opportunistic assets in India. During 2019-Q1 2020, Colliers witnessed Rs 5,600 crore of investment inflows into hospitality real estate in India; most of it involved distressed asset trade transactions.
In a media statement, Sankey Prasad, Managing Director and Chairman at Colliers International India said,
“The opportunity lies in logistics and data centres as well as core commercial office assets. Distressed assets, especially in the hospitality space, are also attractive. The opportunistic asset trade transactions is expected to gain pace in the next 2-3 years with the current economic slowdown.”
Piyush Gupta, managing director, Capital Markets (India) at Colliers International said,
“We recommend investors capitalize on the situation and focus on commercial office assets as India’s competitiveness remains. Further, a lower interest rate regime is likely to compress cap rates over the long term.”
As per the research reports this changing market situation has created opportunities in the residential segment, income-generating core commercial office assets and opportunistic assets, especially in hospitality space.