Institutional investments in the Indian real estate sector touched $3.6 billion in January-September 2022, registering an 18 per cent YoY hike. The inflows during year-to-date (YTD) were driven by the office sector, which accounted for a 50 per cent share, followed by the retail sector that saw some large deals, according to a report by Colliers.
“While investors remain committed to the Indian market, the hovering global recessionary concerns can lead to some delay in fund deployment. The office sector has seen a healthy recovery since late last year with occupiers leasing large spaces as now offices are seen as a place for collaboration,” Colliers said in the report.
The report added that institutional investors are eyeing greenfield (fresh) and ready-office assets with large portfolios, with a view to bundle them up as REITs in the future. Investments into the office sector rose 53 per cent YoY during the first three quarters of 2022.
Piyush Gupta, managing director (capital markets and investment services) of Colliers India, said, “The capital in Indian real estate is getting more broad-based with active participation also from domestic institutional and retail Investors. Domestic capital is seen to flow across asset acquisitions, with credit in multiple asset classes with varied pooled structures. The sentiment of global investment firms to invest in India remains strong in spite of global slowdown trends. The current state of economics, with respect to inflation and interest rates, is not perceived to have a long-term impact.”
Colliers said domestic investors have become more active in the market, with their investment inflows accounting for an 18 per cent share, compared with a 14 per cent share during the same period last year. However, global investors continue to dominate funding activity with higher participation in entity-led deals.
Multi-city deals continue to be on the rise, with a 45 per cent share in investments during YTD 2022. A majority of the deals were entity-led for office assets as investors lap up investment-grade office portfolio. During January-September 2022, Delhi-NCR saw the highest share of inflows at 21 per cent, followed by Mumbai and Bengaluru.
The year 2022 has seen several platform deals between institutional investors and developers for specific sectors. Industrial and logistics assets are high on investors’ radar with several platforms being formed for the development of assets in this space.
Vimal Nadar, senior director and head (research) at Colliers India, said, “With global investors partnering with local developers, there is an ample dry powder to be invested in the Indian real estate market, especially in the office, and the industrial sectors. In the next few quarters, while there may be some slowdown in deployment of funds due to the recession, we believe that the Indian market is relatively well-insulated and investors continue to view it favourably.”
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