Institutional investments in Indian real estate touched USD3.6 bn during January-September 2022, registering a hike of 18% YoY. The inflows during YTD were driven by the office sector that accounted for 50% share, followed by the retail sector that saw some large deals. 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. Institutional investors are eyeing greenfield 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% YoY during the first three quarters of 2022.
“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.” said Piyush Gupta, Managing Director, Capital Markets and Investment Services, Colliers India.
Domestic investors have become more active in the market, with their investment inflows accounting for 18% share, compared to 14% share during the same period last year. However, global investors continue to dominate funding activity with higher participation in entity-led deals.
India Investments inflows
| Asset Class | Investments YTD 2021 (in USD mn) | Investments YTD 2022 (in USD mn) | % Change |
| Office | 1,178.5 | 1,802.7 | 53% |
| Retail | 77.2 | 491.8 | 537% |
| Alternatives | 415.3 | 398.8 | -4% |
| Mixed-use | – | 408.9 | – |
| Industrial & Logistics | 895.6 | 199.8 | -78% |
| Residential | 472.9 | 276.5 | -42% |
| Total | 3039.5 | 3,578.5 | 18% |
Multi-city deals form a chunk of inflows
Multi-city deals continue to be on the rise, with a 45% share in investments during YTD 2022. 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%, followed by Mumbai and Bengaluru.
| City | YTD 2021 | YTD 2022 | % Change |
| Bengaluru | 317 | 375 | 18% |
| Chennai | 98 | 345 | 253% |
| Delhi NCR | 301 | 754 | 150% |
| Hyderabad | 486 | – | -100% |
| Kolkata | 105 | – | -100% |
| Mumbai | 452 | 477 | 5% |
| Pune | 232 | 9 | -96% |
| Others/ Multi-City | 1,049 | 1,619 | 54% |
| Total | 3,040 | 3,579 | 18% |
Platforms deals signalling investor confidence in asset development
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.
“With global investors partnering with local developers, there is ample dry powder to be invested in the Indian real estate market, especially in the office, and the industrial sectors. Over 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,” Vimal Nadar, Senior Director and Head of Research, Colliers India.
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