PE inflows into Indian Real Estate to be 45-50% Lower in 2020

The new business environment caused by the ongoing Covid-19 pandemic is expected to hit the pace of investments into Indian real estate this year across various segments including residential, retail and even hitherto favorite commercial assets.

Private equity inflows in 2020 is expected to be 45-50% lower from a year ago, expects property consultant Cushman & Wakefield. However, it also believes that this decline is likely to be a short-term blip as most funds will be realigning their capital allocation stack.

The new scenario emerging post Covid19 is likely to prompt institutional investors to focus on relatively defensive assets such as warehousing, logistics and data centres.

Rising challenges such as recall of capital by sovereign wealth and pension funds to offer bailout in their home countries and the emergence of attractive opportunities in the developed economies on account of drop in valuations due to recession may also hit private equity investments into Indian real estate assets in the near term, said a Knight Frank India report.

While investment attractiveness of segments like offices, residential and retail are expected to face challenges of work-from-home, pay cuts and job losses; warehousing is expected to emerge stronger from the COVID-19 crisis globally and expect it to outperform other asset classes in real estate in the near term.