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Law360 (April 20, 2020, 3:26 PM EDT) -- First-quarter real estate private equity investment in India was 62% lower than it was in the first quarter of 2019 as COVID-19 caused a severe pullback in the second half of the period, according to a report from Colliers International on Monday.
Private equity investment in the sector came in at $222 million for the first quarter versus $754 million in the first quarter of 2019, according to the report.
And as result, Colliers International has lowered its outlook for 2020 as a whole, the company said Monday in its report.
"We have lowered our projection of private equity inflows in real estate to about $3.5 billion in 2020 owing to slow decision-making by investors," Megha Maan, senior associate director of research at Colliers International, said in a statement on Monday. "However, the changing market situation presents opportunities in the residential segment, income-generating core commercial office assets and opportunistic assets, especially in hospitality space."
Colliers said in the report it expects institutional investors to exercise "slower decision-making" in the second quarter of 2020, which is likely to continue to constrain investment in India real estate.
The company, though, suggested there is opportunity for investment in certain asset classes, despite the COVID-19 pandemic.
"The opportunity lies in logistics and data centers as well as core commercial office assets," Sankey Prasad, managing director and chairman of Colliers International India, said in a statement on Monday. "Distressed assets, especially in the hospitality space, are also attractive."
Colliers said it expects investment in distressed assets to pick up over the next two to three years amid an economic slowdown.
India was not alone in seeing a pullback in investment, as the COVID-19 pandemic sent shock waves across the global real estate market. The hotel industry across the globe was particularly hard hit, and the quarter saw only seven mergers and acquisitions above the $100 million mark.
The 10th largest hotel M&A deal of the quarter was Blackstone's $82 million purchase of the Trident hotel in Hyderabad, India.
India had seen a strong fourth quarter 2019 of private equity investment in hotels, Colliers International said Monday.
"We recommend investors capitalize on the situation and focus on commercial office assets as India's competitiveness remains," Piyush Gupta, managing director for capital markets in India at Colliers International, said in a statement on Monday.
--Editing by Rebecca Flanagan.
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