Real estate investment firms seek to profit from the downturn

NEW DELHI: Leading real estate investment firms view the current economic downturn due to the coronavirus as an opportunity to purchase Class A commercial assets at lower rates.

According to PropShare Capital, a real estate investment platform, asset rates are under pressure in the current scenario and a lower asset acquisition cost for investors will ultimately lead to better returns later.

“This is the best time to invest as rates are on a downward trajectory. There will always be a demand for retail space, so for better returns now is the time to buy, ”said Kunal Moktan, founder of PropShare Capital. “We were looking for a business asset in Bangalore, but the deal could not be done because the owner was looking for higher rates. Now the property is back on the market and we will be negotiating for a better price given the market conditions.

According to Gaurav Karnik, national real estate leader at EY, 2020 will be another big year for the infrastructure and real estate sectors, which accounted for almost a third of all private capital invested in India in 2019.

“We will have some impact from the recent scenario because we don’t know how long it will last. But with a little push, investors can be convinced to invest in the current situation for better long term returns,” Karnik said.

Over the past year, Indian commercial real estate continued to be a preferred destination for global institutional investors amid strong demand for office space, falling vacancy rates and rising rents. The sector attracted more than $ 5 billion in private capital (PE) in 2019, of which more than 66%, or $ 3.3 billion, went to commercial real estate.

Experts believe that since the stock markets collapsed after the coronavirus was announced as a global pandemic, investors have an interest in changing their investment portfolios.

“Real estate can be an industry that can still create an alternative investment opportunity for people,” said Honeyy Katiyal, founder of Investors Clinic. “We urge investors to think that real estate is still the safest option for them,” added Sachin Arora, Business Director, Investors Clinic.

For the real estate sector, the Covid-19 situation could prove to be an additional drag in the short term as the sector is already under intense pressure due to the ongoing liquidity crisis and weak market sentiment, but long-term business history is intact. “We do not see any significant impact on long-term sector investments due to the pandemic,” said Anurag Mathur, CEO of Savills India.


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