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Trends in private equity investment (Q1 2021 update)
I N V E S T M E N T S I N R E A L E S TAT E

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CONTENTS

1 2 3
Trends in Private Equity Private Equity investments Private Equity investments
Investments in Real Estate in Residential in Office

Page no.......................... 05 Page no.......................... 09 Page no.......................... 12

4 5
Private Equity investments Private Equity investments
in Retail in Warehousing

Page no.......................... 17 Page no.......................... 21

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SECTION

01

TRENDS IN PRIVATE EQUIT Y

INVESTMENTS IN REAL ESTATE

Chart 1:

~USD 52 billion invested across debt and equity in

Indian real estate since 2011
Amount invested (USD mn) Number of Deals
Q1 2021 vs Q1 2020 (USD mn)
4,068
2,299

8,579

6,792
8,837
1,404
3,232

5,841
2,515

5,212

3,241

99
94

81
84 Q1
3,241
2021

67

59
51 58 1529% YoY
49

199 Q1
2020
21
19

Source: Knight Frank Research, Venture Intelligence

Note: Private equity includes real estate funds, pure private equity funds, sector-focused funds,
Q1 pension funds, sovereign funds and Alternate Investment Funds (AIF), but excludes investments
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 by SWAMIH fund
Source: Knight Frank Research, Venture Intelligence

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• 2020 was a difficult year for the entire humankind which

spent a significant part of the year battling the COVID-19
pandemic through stringent lockdowns. The pandemic
disrupted business activities across the globe and created
waves of uncertainties. The impact of lockdown-related
uncertainties was evident in the PE investments in India real
estate which dropped 40% YoY in 2020.

• Things improved significantly as we entered the new year in

2021. Investor activity bounced back sharply with the decline
in COVID-19 infections in India in the early months of the year
during Q1 2021. This quarter witnessed PE investments to the
tune of USD 3.2 billion which was ~80% of that witnessed
in full year 2020 and ~48% of full year 2019. The recovery in
investments (in value terms) was majorly driven by office and
retail segments.

• The recovery was evident in volumes (number of deals) as

well. Q1 2021 witnessed 19 deals compared to 21 deals in the
entire 2020. This sharp bounce back in investment volumes
was majorly driven by investor activity in the office and
residential segments.

• The recovery in Q1 2021 was 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. While, Q1 2021 has been an
encouraging quarter for PE investments, however, the
upward trajectory can be derailed by the rising second wave
of COVID-19 infections in India and subsequent lockdowns
in several parts of the country. The sustainability of revival
in investor sentiments will therefore depend on how soon
the second wave of infection subsides and also the pace of
vaccination.

Chart 2:

Share of investments by asset class in

2011 2015 2020 Q12021

■ Mix 8% ■ Mix 12% ■ Mix 0% ■ Mix 0%

■ Office 24% ■ Office 25% ■ Office 62% ■ Office 71%
■ Residential 60% ■ Residential 57% ■ Residential 9% ■ Residential 7%
■ Retail 1% ■ Retail 1% ■ Retail 5% ■ Retail 15%
■ Warehousing 7% ■ Warehousing 5% ■ Warehousing 24% ■ Warehousing 7%

Source: Knight Frank Research

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Chart 3:
Equity route has dominated PE investments in recent years, as big ticket investors who are
bullish on annuity assets, are committing substantially higher risk (equity) capital

DEBT EQUITY

80%
60%

96%
59%
82%

82%

93%
53%

92%
70%
81%

40%

30%

20%
47%
18%

18%
41%
19%

8%

4%

7%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 2021

Source: Knight Frank Research

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SECTION

02

PRIVATE EQUIT Y
INVESTMENTS IN RESIDENTIAL

Chart 4:

PE (Debt + Equity) investment in residential

Amount invested (USD mn) Number of Deals
Q1 2021 vs Q1 2020 (USD mn)
2,096
2,952
1,096

1,028
1,943

2,913

1,370

368

234
712

717

74
75

61
Q1
234
2021

49 46
43

35

-
21
Q1
18 2020

7 7

Q1
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: Knight Frank Research, Venture Intelligence Source: Knight Frank Research, Venture Intelligence

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• The residential segment in India had
suffered a down cycle during the second
half of the last decade. The sector
battled slowing sales velocity, stagnant
or reducing end product prices, rise
in input costs and dearth of funding,
particularly after the IL&FS and NBFC
crisis. Consequently, PE investment in
residential declined each year since
2016 both in value terms as well as
volume. This cycle also saw a large
number of unscrupulous and non-
• Another interesting trend is that home
serious developers exit the real estate
business and serious developers with
strong project execution capabilities
survive.
• Q3 2020 and Q4 2020 saw an
• A significant percentage of homebuyers
encouraging demand pull back after a
lockdown induced lackluster Q2 2020.
Despite the hit on income streams
due to the lockdown and contrary to
the perception of widespread demand
Chart 5:
The comeback of equity investments in recent years
DEBT EQUITY
destruction during the early days of
lockdown, the residential segment
witnessed a strong growth in sales
in the months after the lockdown, on
the back of historic low home loan
interest rates, pent up demand, fence
sitters coming back to the market,
increase in household savings rate
due to the lockdown and incentives
• The cumulative impact of this has been
extended by developers and some state
governments.
ownership which was being deferred
due to the ‘uberisation culture’ of recent
years, has made a strong comeback
due to the pandemic.
• With private equity players hopeful of
are buying new homes due to the
pandemic and not in spite of the
pandemic. This trend is predominant
in the upgrade demand. The pandemic
has brought office, school, college
and regular household activities within
the boundaries of the home, making
families realize the importance of
having additional rooms in their houses,
thereby creating a fresh demand for
upgrading to larger homes which may
not have been a necessity earlier.
witnessed in the uptick in quarterly
All-India residential sales. After the
lockdown restrictions were lifted in a
phased manner between Q2 and Q3
2020, All-India residential sales grew by
5% YoY in Q4 2020 and by 44% YoY in
Q1 2021.
new residential business cycle, the
residential segment has witnessed
investments worth USD 234 million in Q1
2021 which was 64% of that witnessed
during the entire 2020 and 38% of that
witnessed in 2019. In volume terms
(number of deals), the investment
activity touched 100% of 2020 levels
and 39% of 2019 levels in the first 3
months of 2021.

• The investor preference, which had

68%

44%
66%

49%
69%

35%
52%

52%
32%

67%
21%

moved from equity to debt (chart 5) in

the last decade, again tilted strongly
in favor of equity in 2020 and Q1 2021,
indicating a resurgence in appetite
to take risks and hopes for the new
business cycle.

• During the lockdown in March 2020, due

to cultural inclination of Indians to save
money, families were able to sustain
using their savings. However, this
cushion has not been replenished for
48%

48%
68%
56%

65%
34%

33%
32%

79%
51%
31%

79%

many and if a major national lockdown

happens again, several families may find
it difficult to make a high-ticket purchase
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 2021 like housing. Hence, the trajectory of
Source: Knight Frank Research recovery in residential needs to be
monitored cautiously.

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04

PRIVATE EQUIT Y
INVESTMENTS IN OFFICE

Chart 6:

Office segments received (equity) investments of over

USD 18.4 billion since 2011
Amount invested (USD mn) Number of Deals
Q1 2021 vs Q1 2020 (USD mn)
2,509
4,092

3,096
1,226

2,148
2,168
620
390

926
393

792

20

Q1
2,148
2021

16

1423% YoY

5
6 6 6 141 Q1
2020
5
4 4
4

Q1
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: Knight Frank Research, Venture Intelligence Source: Knight Frank Research, Venture Intelligence

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• The office sector continues to be the blue-eyed boy for

investors due to the strong fundamentals of the India Chart 7:

office market. The investors are also emboldened by the Share of (equity) investments in 2016
encouraging response to the 3 REITs listed on Indian stock
exchanges which provides them with a credible avenue for
exit.

• Despite the concept of work from home gaining prominence

during the lockdown, investors continue to bet big on the
growth in overall office demand in India and expect the
office demand to recover completely once the masses are
vaccinated. The investors were also encouraged with the
recovery in office leasing in December 2020 quarter which 86%
had touched 115% of 2019 quarterly average. Further, with Ready
the consistent decline in COVID-19 cases in India between
October 2020 and February 2021, several companies had
started calling their employees back to offices. However,
the plans of complete return to office have been pushed
forward by the rises in COVID-19 infections and subsequent
restrictions in April 2021.

• In Q1 2021, the segment witnessed PE investments (equity) 6%

worth USD 2.1 billion, which was 92% of that witnessed during Under construction
the full year 2020 and 72% of investments during 2019. Q1
2021 witnessed 7 deals - as many as that seen during full year
2020.
8%
New Development
• In 2016, 14% of investments were into new development and
under-construction projects.In the latest period of Q1 2021,
55% of PE investments were in new development and under-
construction projects. In the primary reason for this increase
in share of new development and under-construction assets is Source: Knight Frank Research, Venture Intelligence

the paucity of mature transactable assets in the Indian office

market.

Chart 8:

Share of (equity) investments in Q1 2021

43% 39% 12% 7%

Mix Under Construction Ready
New Development

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Table 1:
~241 mn sq ft of office space was transacted in the last decade of which
~80 mn sq ft were a part of India’s first three REITs with future REIT po-
tential of at least 160 mn sq ft
Total area of the assets Total area of the assets
Year
transacted (mn sq ft) transacted (mn sq m)

2011 5.8 0.5

2012 18.9 1.8

2013 11.6 1.1

2014 5.6 0.5

2015 5.8 0.5

2016 13.5 1.3

2017 56.7 5.3

2018 36.1 3.4

2019 33.7 3.1

2020 21.8 2.0

2021 31.5 2.9

Grand Total 241 22.4

Source: Knight Frank Research

Chart 9:
PE funds are the most active in office space followed by SWF and
Pension Funds

Share of USD 18.4 billion investments since 2011

90% PE

10% Sovereign / Pension Fund

<1% Insurance

Source: Knight Frank Research

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Table 3:
City wise investments - Mumbai takes the largest
quantum of (equity) investment since 2011

City Amount invested Number

(USD mn) of deals

Mumbai 5,288 22

NCR 3,368 14

Hyderabad 2,866 16

Bengaluru 2,303 13

Bengaluru,
Chennai, 2,000 1
NCR*

Chennai 1,118 9

Chart 10:
Origin of PE investors investing in office assets Pune 936 10

Amount invested (USD mn) Number of deals

UAE India
564 2 1,695 21
Chennai, 415 1
Singapore Hyderabad*
5,566 30
Canada
2,997 7

Others 67 1

Grand Total 18,361 87

Total
18,361 87

US
7,539 27 Source: Knight Frank Research
Note - * Represents investments in a single deal and Grand total represents investments
Source: Knight Frank Research since 2011
Note: Grand total represents investments since 2011

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05

PRIVATE EQUIT Y
INVESTMENTS IN RETAIL

Chart 10:

PE (Equity) Investments in Retail

Q1 2021 vs Q1 2020 (USD mn)
Amount invested (USD mn) Number of Deals
484
220
545

388
652

922
28

37
0

5 Q1
484
5 5 2021

2
- Q1
2020

1 1
1

0 0
0
Q1
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: Knight Frank Research, Venture Intelligence
Source: Knight Frank Research, Venture Intelligence

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• The retail sector has been the worst affected segment in this
COVID-19 crisis. The pandemic induced lockdown in March Table 6:
2020 had forced all malls to temporarily shut down affecting Unlike office assets, investor interest in retail goes
their business adversely. Malls have been amongst the last beyond major metros
to open in 2020 during the unlocking phases and the fear of
virus has kept the consumer footfalls low. As a result, the PE
investment dropped by 76% in 2020. City Amount invested Number
(USD mn) of deals
• Several mall owners in India had announced a partial/full rent
waiver for the lockdown period in 2020 taking a major hit on Mumbai 1,154 5
the revenues. Some had extended this partial waiver for the
rest of the financial year and also offered to waive off a portion
of the minimum guarantee or a fixed portion of rents and shift Bangalore 512 2
to a higher percentage of revenue share. Significant losses
to retailers due to lockdown and fear of vacancy forced mall
owners to enter into such arrangements. Pune 5
434
• The retail sector was barely starting to recover from the crisis,
when the second wave of COVID-19 infections struck the nation
in March-April 2021. The new lockdown in several parts of Chandigarh 267 2
the country has forced retail assets to shut down again. This

Hyderabad 197 2

Table 5:
34.4 mn sq ft of retail assets were transacted in the
NCR 2
last decade 160

Total area of the Total area of the assets

transacted Ahmedabad 123 1
Year assets transacted
(mn sq ft) (mn sq m)

2011 - - Lucknow 115 1

2012 1 0.1
Chennai 2
106
2013 - -

2014 - - Nagpur, Amritsar* 1

100

2015 1.2 0.1

Indore 61 2
2016 4.7 0.4

2017 6.0 0.6 Bhubaneshwar 1

46

2018 4.9 0.5

Grand Total 3,276 26

2019 8.9 0.8

Source: Knight Frank Research

2020 2.7 0.3 Note - * represents investments in a single deal and Grand total represents investment
since 2011

Q1 2021 5 0.5

Grand
34.4 3.2
Total

Source: Knight Frank Research

Note- YTD 2020 represents investments till Q3 2020.

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shutting down of retail assets is limited to

certain states presently, however, if it spreads Chart 12:
to other states, it may lead to a big hit on Origin of PE investors in retail assets
topline for a majority of asset owners. Such Amount invested (USD mn) Number of deals
high levels of uncertainty have kept investors
away from retail assets, and only one major
Singapore
deal was transacted in Q1 2021.
India 1,122 7
Canada
• In Q1 2021, PE investments in retail assets 436 7
250 1
jumped to USD 484 million from USD
220 million in 2020, and this jump can be
attributed to the single large deal between
Blackstone and Prestige which involved
multiple retail, office and hospitality assets as
part of the larger transaction.

Chart 11:
Total
Share of equity investments since 2011
3,276 26

US
1,465 11

Source: Knight Frank Research

Note: Grand total represents investments since 2011

39%
Ready

36%
New Development

Chart 13:
PE and long-term capital providers alike actively participating in
quality retail assets

Share of investments since 2011

15% 83% PE

Mix
12% Sovereign / Pension Fund

14% 5% Developer

Under construction
Source: Knight Frank Research

Source: Knight Frank Research

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06

PRIVATE EQUIT Y
INVESTMENTS IN WAREHOUSING

Chart 4:

PE (Equity) investments in warehousing Q1 2021 vs Q1 2020 (USD mn)

Amount invested (USD mn) Number of Deals
2,354

2,252

1,895
300

250

216
135

971
70

8 8

7
Q1
216
2021

272% YoY
4

2 58 Q1
2020

1 1 1

0 0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q12021 Source: Knight Frank Research, Venture Intelligence

Source: Knight Frank Research, Venture Intelligence Note: Private equity includes real estate funds, pure private equity funds, sector-focused funds,
pension funds, sovereign funds and Alternate Investment Funds (AIF).

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• Globally, investors expect the warehousing

segments to emerge stronger from the
Chart 13:
crisis, driven primarily by the renewed growth
PE and long-term capital providers alike actively participate
potential of e-commerce segment, which would in creating new warehousing assets
lead to further demand for warehousing spaces.
A significant chunk of consumer spending is
Share of investments since 2011
likely to shift online due to restrained consumer
mobility and repeated lockdowns.
57% PE
• A huge quantum of investments committed
to warehousing over the last few years is
awaiting deployment. There are not many 25% Sovereign / Pension Fund
transactable land parcels in India with clear title
and acquisition of new land parcels remains a
challenge. Thus, the investment numbers have 18% Developer
declined since 2017-18.

• In Q1 2021, the warehousing segments Source: Knight Frank Research

witnessed investments worth USD 216 million

across 4 deals.

Chart 14: Chart 12:

Lack of mature assets in India and Origin of PE investors in warehousing assets
lower construction timelines post land
acquisition make a strong case for
greenfield investments
Amount invested (USD mn) Number of deals

China

India 100 1
UAE 1,006 10
1,600 2

74% Canada
Singapore
2,616 12
900 2 France
New Development
150 1

Germany
1,000 1

Ready 16%

Total
Mix 9% 8,423 37

US

1% 996 7

Under construction
Source: Knight Frank Research
Note: Grand total represents investments since 2011
Source: Knight Frank Research

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Shishir Baijal
Chairman and Managing Director
shishir.baijal@in.knightfrank.com

ADVISORY, RETAIL & HOSPITALITY

Gulam Zia
Executive Director
gulam.zia@in.knightfrank.com

Rajeev Vijay
Executive Director - Advisory
rajeev.vijay@in.knightfrank.com

Saurabh Mehrotra
National Director - Advisory
saurabh.mehrotra@in.knightfrank.com

CAPITAL MARKETS
Tushar Rane
Executive Director
tushar.rane@in.knightfrank.com

Sharad Agrawal
Executive Director
sharad.agrawal@in.knightfrank.com
AHMEDABAD
Balbirsingh Khalsa
FACILITIES & ASSET MANAGEMENT SERVICES
Branch Director
Sathish Rajendren
balbirsingh.khalsa@in.knightfrank.com
Chief Operating Officer
sathish.rajendren@in.knightfrank.com
BENGALURU
Shantanu Mazumder
INDUSTRIAL & LOGISTICS SERVICES
Senior Branch Director
Balbirsingh Khalsa
shantanu.mazumder@in.knightfrank.com
National Director
balbirsingh.khalsa@in.knightfrank.com
CHENNAI
Srinivas Ankipatti
Pinkesh Teckwani
Senior Director
National Director
srinivas.ankipatti@in.knightfrank.com
pinkesh.teckwanii@in.knightfrank.com

HYDERABAD
OFFICE AGENCY & LRG
Samson Arthur
Viral Desai
Branch Director
National Director
samson.arthur@in.knightfrank.com
viral.desai@in.knightfrank.com

KOLKATA
PROJECT MANAGEMENT
Swapan Dutta
Deben Moza
Branch Director
Executive Director
swapan.dutta@in.knightfrank.com
deben.moza@in.knightfrank.com

NCR
RESEARCH
Mudassir Zaidi
Rajani Sinha
Executive Director - North
Chief Economist & National Director
Report Author mudassir.zaidi@in.knightfrank.com
rajani.sinha@in.knightfrank.com

PUNE
Nibodh Shetty
Paramvir Singh Paul
Vivek Rathi
Consultant - Research Branch Director
Director - Research
nibodh.shetty@in.knightfrank.com paramvirsingh.paul@in.knightfrank.com
vivek.rathi@in.knightfrank.com

23
 years in

INDIA
ADVISORY, RETAIL & HOSPITALITY RESEARCH
Work From Home
India Real Estate

Gulam Zia Rajani Sinha

Executive Director Chief Economist & National Director
Co-working

gulam.zia@in.knightfrank.com rajani.sinha@in.knightfrank.com

CAPITAL MARKETS
Tushar Rane
Executive Director
tushar.rane@in.knightfrank.com
India Warehousing
Bengaluru Urban

Investments in
Infrastructure

Sharad Agrawal
Real Estate

Executive Director
sharad.agrawal@in.knightfrank.com

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