Institutional Investments In Real Estate Jumps Over Two-Fold To $1.1 Billion In January To March

Institutional investments in real estate jumped over two-fold to $1.1 billion (Rs 8,375 crore) in the three months ended March 2022 with the opening up of the economy after the third Covid-19 wave, according to property consultant Colliers India.

Institutional investments in real estate stood at $0.5 billion in the year-ago period and $1 billion in the previous quarter.

"Institutional investments in Indian real estate touched $1.1 billion during Q1 2022, doubling from the same period last year. The opening up of the economy post the third wave of Covid-19 infections, and an improvement in investors' sentiment has led to surging investments, compared to the prior quarter," Colliers India said in a statement.

The investment activity during the quarter under review was driven by some large-sized deals in the office sector.

"Investments were largely driven by foreign investors, which accounted for about 70 per cent of the inflows during the quarter. Interestingly, after a drop in 2020, the share of domestic investments has reached 30 per cent, almost the same as pre-pandemic levels. This shows a resurgence in the confidence of domestic investors," the consultant said.

Office, retail, and industrial & logistics segments contributed 95 per cent of the total institutional investment in the real estate sector during the January-March period.

The retail sector attracted the second-highest share of investments at 23 per cent, backed by one major transaction. Industrial and logistics assets received inflows of $0.2 billion, accounting for about 16 per cent of total investments.

Investments in data centres continued to grow in Q1 2022 to about $40 million as global data centre REITs, data centre management firms and hyperscalers continued to invest in India.

According to Colliers India, investments in the residential sector remained muted, attracting only $15 million in the first quarter of 2022, just about 1 per cent of the total investments.

However, the consultant expects investment momentum to increase over the next few quarters as domestic investors remain bullish on the sector and are actively raising funds.

Piyush Gupta, Managing Director, Capital Markets & Investment Services, Colliers India, said, "Real estate sector has undergone positive structural changes and performance indicators reflect strong come back across Residential, Office, Industrial, Logistics sectors, with newer themes around technology and digital clearly emerging."

Investors, both domestic and global are appearing bullish on Indian real estate supported by pro-growth government policies with a long-term view to develop and hold assets, he added.

"Multi-city deals accounted for 65 per cent of the total investments in Q1 2022 as investors laid focus on entering into strategic alliances with leading developers and on acquiring/developing portfolios across multiple cities. We are also seeing the creation of platforms for investment in specific asset classes, especially across the commercial office and industrial asset classes," said Vimal Nadar, Senior Director and Head of Research, Colliers India.