India emerges as one of the top growth markets in the APAC region

Investment activity is forecast to increase steadily across the Asia Pacific region in 2024 , according to Colliers’ (NASDAQ and TSX: CIGI) 2024 Global Investor Outlook. The 2024 Colliers Global Investor Outlook combines on the ground perspectives from our senior experts in Asia Pacific (APAC) and globally with key insights from a survey of our international investor client base, analysed by our industry-leading research teams.

This year’s report points to steadily increasing activity in APAC markets throughout 2024 as certainty around the policy environment takes hold, gaps between buyers and sellers narrow and more investors move to deploy capital.

Colliers anticipates a more positive 2024 than 2023, with a lot of pent-up equity which is looking to find a home. Particularly within the APAC region, investors are aware of the resilience of the asset class and the growth opportunities offered in rapidly maturing markets such as India and South Korea. Colliers anticipates a more dynamic year ahead where the ability to act quickly, dig deeply into markets and sectors to identify value, and forge productive partnerships which will be key to making the most of the region’s resurgence.

The survey data points to an upswing in the proportion of investors planning to boost real estate allocations. Almost 60% of APAC investors expect strong regional economic growth to contribute positively to the real estate environment. APAC region is expected to drive global investment levels in 2024 with a growing depth of capital.

“As more established markets start to stabilise, investors are growing more confident about extending their search for opportunities in growth markets. This is particularly apparent in India, which is expected to remain one of the fastest-growing major global economies, led by private consumption and capital formation. The opportunities to invest in India continue to spread across office, logistics, private credit, residential and data centres.”, said Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers India.

While geopolitical outlook represents an overall downside risk to the investment market globally, India continues to demonstrate resilience through its high growth trajectory, remaining one of the fastest growing economies of the world at 6.3% in 2024. Investments into India continue to grow annually and 2023 has seen a strong 27% YoY growth so far. This is steered by long-term confidence in core asset classes and emerging avenues for diversification. From the lens of global and APAC investors, the Indian real estate market currently offers stable returns paired with attractive pricing, better valuations, and higher yields.

“The preference of India within Asia Pacific growth markets is getting stronger, driven by strong performance of economy, improved regulatory framework and robust demand across multiple real estate sectors. Global investors have consistently preferred Indian real estate market, infusing over USD23 Billion since 2018, accouting for 77% of the total investments during this period. USA remains the top investor contributing to about 44% of the foreign inflows, followed by Canada and APAC  at 25% share each. Foreign investors are likely to remain bullish on the Indian market over the next few quarters, as interest cycle continues to reverse, and the yield spread between bonds & real estate continue to widen, making real estate an attractive proposition.“, said Vimal Nadar, Senior Director and Head of Research, Colliers India

Asset class-wise Investments inflows in India (USD bn) in 2018 to till date* – 

Note: * ’till date’ pertains to the data available up to September 2023.

**Alternate assets include data centres, life sciences, senior housing, holiday homes, student housing 

etc

Source: Colliers

The report also highlighted the strength of core assets, rising awareness of ESG and the new alliances & the shifting strategies that will redefine the investment landscape in 2024.

Office to remain at the core

In India, Institutional investors continue to have their bets on the office sector, on the back of increased opportunities, resilient demand, robust growth prospects and availability of exit avenues in the form of REITs. During 2023, institutional investments in office assets rose 1.6X YoY at USD2.9 billion, accounting for about 63% of the total inflows (for the nine months ended September 2023). While global investors continue to dominate the funding activities with higher participation in entity-led deals, domestic investors have also become more active in the market. Performance credit, special situations, portfolio acquisitions, asset reconstruction and related structures have been growing and are likely to attract more investments.

Alternate assets to gain pace in 2024

There is increased investor appetite towards residential, industrial & warehousing and alternative segemnts as well. Institutional investors are specifically capitalizing on the data center growth story sparked by their stable income, higher yields, supportive regulatory framework and have infused USD 1.1 Billion since 2020.

As ESG has become pivotal to occupiers and investors across the globe, Indian investors have also started formulating strategies around ESG that are aligned to their long-term ESG targets.  Although at a nascent level, investors have started monitoring & reporting their environmental impact as a part of due diligence and asset management activities aiming long term resilience and growth of their businesses. Office assets specifically have seen increased adoption of green certifications, owing to rising demand for green buildings and higher rental premiums compared to other asset classes.

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