Real estate investment companies look to cash in on slowdown

NEW DELHI: Leading real estate investment firms are viewing the current economic slowdown due to coronavirus as an opportunity to buy grade A commercial assets at cheaper rates.

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

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

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

“We will have some impact of the recent scenario since we are not sure how long it will last. But with a little push, investors can be convinced to invest in the current situation for better long term return,” said Karnik.

Last year, the Indian commercial real estate continued to be a preferred destination for global institutional investors in the backdrop of robust office space take-up, falling vacancy levels and rising rentals. The sector attracted more than $5 billion private equity (PE) inflows in 2019 with over 66%, or $3.3 billion, going to commercial real estate.

Experts feel that since stock markets have been crashing after the announcement of coronavirus as a global pandemic, there is a case for investors to make a shift in their investment portfolios.

“Real estate can be one sector which can still create an alternate sound investment opportunity for people,” said Honeyy Katiyal, founder of Investors Clinic. “We are urging investors that real estate is still the safest option for them,” added Sachin Arora, corporate director, Investors Clinic.

For the real estate industry, Covid-19 situation could prove to be an additional dampener in the short term as the sector is already under intense pressure because of the ongoing liquidity crunch and the weak market sentiment but the long term commercial story is intact. “We do not see any significant impact on investments into the sector in the long run because of the pandemic,” said Anurag Mathur, chief executive officer, Savills India.