The project is strategically located, with convenient access to excellent road, rail and metro network. The catchment also boasts of developed social infrastructure and is a major driver for buyers preferring the western suburbs of Mumbai. The funds will be deployed for acquisition and working capital requirement of the project.

Bhavin Jain, CIO, ASK Property Fund said, “We are pleased to make our second investment with the Kalpataru Group. The redevelopment project is an exceptional investment opportunity, given its location within an established catchment area. Our growth capital is aimed – at providing acquisition, and necessary working capital funding. The investment is perfectly aligned with our investment strategy and marks a significant milestone of identifying repeat opportunities with existing relationships”.

“The catchment is primarily an end-user market and benefits from infrastructure augmentation in the last few years. The inventory overhang is low and strong demand in the micro market will help to achieve healthy & sustained sales velocity for the residential project being redeveloped”, he added.

As per ASK Property Fund Research, Borivali continues to be a dynamic catchment with substantial potential for property value appreciation. The market has experienced a significant increase in absorption over the past two years, with a year-over-year increase in sales of approximately 18-20% in 2023. With additions of quality supply, the catchment has benefited from a gradual property value appreciation and is likely to follow a similar trend in the coming years.

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Colliers’ 2024 Investor Insights – Country Spotlight Seriesprovides real estate investors and owners with unique insights into the year ahead and a deep understanding of key markets across the Asia Pacific region.

“2024 is anticipated to be a more dynamic year for the both the Asia Pacific real estate markets as well as capital in the region remaining the dominant investor in global real estate. The ability to act quickly, dig deeply into markets and sectors to identify value, and forge productive partnerships will be key to making the most of the region’s diversity and increased opportunity. ” Chris Pilgrim, Colliers Managing Director of Global Capital Markets, APAC, said.

Key findings include:

Singapore: Singapore has earned a reputation as a safe haven and a highly favourable base for global real estate investments; it stands out for those looking to invest in quality core assets, offering long-term capital appreciation and stable yields for decent total returns.

China: Almost all asset classes have experienced price corrections, presenting a favorable opportunity for long-term investors. C-REITs offer alternative exit channels for investors and help attract more domestic capital.

India:  India’s economic resilience, coupled with favorable investment climate and rapid urbanization, has enhanced its appeal as a promising investment destination for global funds. 

With IMF’s projected GDP growth rate of 5.7% in 2024, India remains one of the fastest-growing economies globally, and one of the most preferred emerging countries within the Asia-Pacific (APAC) region, offering attractive pricing, better valuations, and higher yields. 

Foreign inflows too witnessed a rebound in 2023 registering a 20% YoY rise at USD 3.6 Billion. These investments were not confined to traditional avenues but extended to alternative asset classes, bolstering the robust domestic growth in office, residential, and industrial segments. Going forward, investor appetite is likely to remain strong with newer funds looking to enter the Indian market. While strong preference continues for income-yielding office assets, residential, industrial and alternatives are likely to witness renewed interest. 

“Investments in Indian Real Estate have been consistent for the past few years and have an innate potential to grow further on account of structural changes in demand for capital. Global investors have always remained at the forefront and consistently infused average USD 4 Billion annually in the last five years, showcasing continued commitment and confidence towards the sector. With a rise on performance credit, special situations, portfolio acquisitions, asset reconstruction and related structures the sector is poised to attract even more investments in the next few years,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers India. 

Average annual institutional inflows into India 2019-23 (USD Bn)

Source: Colliers 

Sector wise average foreign inflows into India 2019-23 (USD Bn)

Source: Colliers 

India’s real estate sector sees rising interest from the APAC countries 

While countries such as the US and Canada remain top source countries for capital, leading APAC countries such as Singapore, Hong Kong, South Korea, and Japan are also gradually eyeing India’s growing real estate market. In 2023, Investment inflows from the APAC region surged 57% YoY to USD 1.8 billion, of which 70% were in office assets. However, apart from office assets, APAC countries have also shown interest in residential, industrial, and warehousing assets. During 2023, the inflows almost doubled since 2019, signaling a significant uptick in investor interest and confidence in India’s real estate sector.

Investment inflows from APAC region in Indian real estate (2019-2023) – 

Source: Colliers 

Looking ahead to 2024, investors are expected to increase their activity in India’s real estate market, driven by a robust economic performance, positive business environment and robust demand across core and alternative sectors. Anticipation of heightened activity in a way reflects certainty around the policy environment, narrowing gap between buyers and sellers and investor intent to deploy more capital across real estate asset classes. 

“In 2023, a striking 90% of investment inflows into India’s office sector originated from foreign investors, demonstrating strength of the underlying asset class. This marks a transformative period for the industry. Furthermore, as sustainability gains further prominence in investment decisions, the real estate sector including office market of India is set to align seamlessly with global Environmental, Social, and Governance (ESG) standards.”,said Vimal Nadar, Senior Director and Head of Research, Colliers India.

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The rental rates and capital value for office segment have remained steady inspite of healthy demand for CRE in the key markets of Bengaluru that was countered by supply keeping the cap rates range bound. Mumbai office market saw lower supply with better demand pushing vacancy down, but yields did not change significantly. The return expectation in this stable yield environment remained unchanged with cap rates being range bound.The industrial cap rates remained flat owing to stabilization of yields and asset values as sustained demand from the third party logistic (3PL) players, eCommerce, and fast-moving consumer goods (FMCG) sectors is countered by new supply in Mumbai.

“RBI has maintained an accommodative stand in the interest rates despite the inflation being at the higher end of the targeted tolerance band. Further, the GDP growth rates are revised to be higher for 2024, backed by the growth of private consumption, investment indexes, and trade merchandise, indicating a positive Marco-economic climate. This is indicative of the RBI to continue maintaining an accommodative stance in the short term which will continue to ensure ease of capital supply in the market, pushing up both consumer and institutional investments. It will provide an impetus to the real estate assets where cost of financing and mortgage rates are likely to remain stable, thereby supporting the demand in the market. Additionally, it will lend support to demand keeping capital value and NOIs growth trends constant in yield-based real assets due to both operational and financial costs being range bound, resulting in stabilised cap rates in most asset classes.”, says Ajay Sharma, Managing Director, Valuation Services, Colliers India.

“Given the yields of commercial, retail and industrial segments, the overall real estate sector will witness stable growth, and there will be increased interest in investments leading to significant capital flow to these assets.”, adds Sharma.

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On a quarterly basis, inflows into Q2 2022 have increased from the preceding quarter, while registering a 50% increase from the average quarterly inflows of 2021.

“The first half of 2022 has witnessed euphoria of businesses bouncing back with increased office and industrial leasing, retail and travel spend, and continued buoyancy in the residential sector. However, the market is seeing some caution on account of geopolitical tensions and increased expected risk-adjusted returns.  Investments in India continue to increase in both development and operating assets. With the current business environment, India will benefit the most from the Asian economies with increased Capital inflows. The Indian Real Estate likely to witness both equity and credit inflows tapped by existing and newer Investment Management platforms ”  said Piyush Gupta, Managing Director, Capital Markets & Investment Services, Colliers India.

Interestingly, domestic investors are back in the market with a 38% share in H1 2022, a massive jump from just 13% share in H1 2021. Domestic investors were majorly inclined towards mixed-use assets and the retail sector. However, investments continue to be driven by foreign investors wherein pension and sovereign funds are betting on income-yielding assets in the office, retail and industrial sectors.

India Investments inflows

Office sector continues to rule inflows with a 48% share in H1 2022

During H1 2022, the office sector garnered about 48% of the investments. Investors are seeing encouraging signs of revival in the office sector since late last year. While a hybrid style of work is the dominant mode of working, large technology corporates continue to lap up office spaces. Investors are taking a medium to a long view of the sector, with the intention of bunding assets into REITs. As a result, investments in the office sector rose 20% YoY in H1 2022.

During H1 2022, the retail sector saw a 19% share in investments as investors look toward completed malls as an investment avenue. India’s retail market is seeing an expansion of fashion and F&B brands. Also, malls have been seeing a healthy pick-up in footfalls since last year. The industrial & logistics sector and the residential sector saw subdued inflows during H1 2022.

Investments in alternate assets up 53%

Investments inflows into alternate assets rose 53% YoY during H1 2022 to about USD370 million, indicating that investors are betting big on diversifying their portfolios. Deals during this period ranged from data centers, holiday homes and life sciences.

“A recession in the global markets will have some bearing on India. On the positive side, we see this boosting IT services in India. We can expect more investments in global capability centers in India over the next few years. Moreover, there is untapped potential in India’s alternate assets which investors are looking for from a diversification perspective. During H1 2022, inflows in alternate assets accounted for 14% of total investments. The next few quarters will see some greenfield investments, especially in the office and industrial & logistics sector,” Vimal Nadar, Senior Director and Head of Research, Colliers India.

Delhi-NCR saw the highest chunk of inflows, but multi-city deals most popular

Delhi NCR saw the highest share of inflows at 35%, followed by Mumbai with an 11% share and Chennai with a 10% share. However, multi-city deals continue to be on the rise, with a 43% in investments during H1 2022. These deals were entity-led for assets across multiple cities.  

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By Varun Singh

Institutional investments in Indian real estate touched USD1.1 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. The investment activity during the quarter was driven by some large-sized deals in the office sector.

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

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. From a city level, Mumbai continues to be the market leader with a share of 25% in total investment inflows. This shows immense confidence of investors in the sector”.

The office market has made a comeback in terms of investments, with occupiers continuing to see it as a stable income-accruing asset class. Moreover, the office market is now recovering with Q1 2022 seeing stable vacancies for the first time in two years. The retail sector attracted the second-highest share of investments at 23%, backed by one major transaction. Investment in the retail sector was the highest since the start of the pandemic. Global investors continue to show strong interest in under construction as well as stabilized retail assets, as they are expecting a revival.

Industrial and logistics assets received inflows of 0.2 USD billion, accounting for about 16% of total investments. Investor appetite for industrial and logistics assets remained robust backed by strong structural demand from e-commerce and 3PL firms. Investors continued to scout for land parcels for in-city warehouses and in the peripheral locations of larger markets. Heightened investment activity is seen on the back of strong demand for modern industrial and logistics assets coupled with a shortage in supply.

“Multi-city deals accounted for 65% 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”, says Vimal Nadar, Senior Director and Head of Research, Colliers India.

Residential likely to see increased fund flows as fundraising remains strong

Investments in the residential sector remained muted attracting only USD15 million in Q1 2022, just about 1% of the total investments. However, we expect investment momentum to increase over the next few quarters as domestics investors remain bullish on the sector and are actively raising funds. The residential sector is witnessing tailwinds amid a significant rebound in sales momentum after a turbulent spell since the NBFC crisis in 2018, followed by the pandemic. In Q1 2022, a major investment group marked the close of an affordable housing fund, one of the largest funds targeted towards residential real estate in India.

Global REITs and data centre management firms continue to expand their portfolios in India

Investments in data centres continued to grow in Q1 2022 to about USD40 million, as global data centre REITs, data centre management firms and hyperscalers continued to invest in India. Chennai is witnessing significant traction in data center development and has the potential to emerge as a  key data centre hub in South Asia due to its strategic location as submarine cables landing station. Investment opportunities in data centres are surging, given the huge growth in demand for cloud computing from enterprises, deeper internet penetration, and infrastructure status granted to data centres.

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