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Thursday, July 25, 2024

Foreign investors infuse an average of ~USD 4 Bn investments per year in Indian real estate

Global diversified professional services and investment management company Colliers (NASDAQ, TSX: CIGI) has recently launched its latest insights into the dynamic year ahead forecast for the Asia Pacific real estate industry.

Colliers’ 2024 Investor Insights – Country Spotlight Series provides 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,” saidPiyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers India.

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

Average Annual total inflows (2019-23)5.1
Average Annual foreign inflows (2019-23)4.0
Share of foreign inflows in total inflows (2019-23)77%

Source: Colliers

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

SectorAverage Annual inflows (USD Bn)
Office2.0
Alternatives0.5
Industrial & Logistics0.4
Residential0.4
Mixed use0.4
Retail0.3

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) –

Year20192020202120222023
Inflows from APAC (in USD Bn)0.90.50.91.11.8

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.

Foreign Investment Deals 2023:
QuarterYearInvestorInvesteeDeal Value (USD Million)CityAsset Class
Q22023Brookfield India Real Estate Investments Trust and GIC      1,400.0Others/ Multi CityOffice
Q22023CPPIBRMZ Corp        324.2MumbaiOffice
Q12023Singapore-based fund Pragati Group        200.0Delhi NCRIndustrial & Logistics
Q12023PAG Credit & MarketsM3M        180.9Delhi NCRResidential
Q32023Qatar Investment Authority (QIA), UK-based property major Grosvenor’s Diversified Property Investments businessIndospace        150.0Others/ Multi CityIndustrial & Logistics
Source: Colliers

To read these reports, click here.

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